The global economic expansion has decelerated in the face of several macro challenges. Elevated policy uncertainty, tariffs, and the longest U.S. government shutdown in history have weighed on consumer sentiment but, importantly, leading indicators remain at levels consistent with a sluggish economic expansion rather than recession. Tariffs remain a key risk to the economic outlook as negotiations are highly fluid and subject to change with little notice. More recently, though, there has been some relief on the trade front, as the U.S. struck a deal with China and the U.S. lowered tariff rates on a variety of food categories.
Against this backdrop, the U.S. Federal Reserve resumed interest-rate cuts, with 0.25% reductions at each of the September, October and December decisions. The labour market has softened but U.S. Consumer Price Index (CPI) inflation, at 3.0%, remains above the 2.0% target. Global equities climbed to fresh records during the past quarter as investors embraced risk-taking amid easier monetary conditions, strong corporate profits and optimism around the benefits of artificial intelligence.
As we turn over a new page and welcome in 2026, we are seeing a renewed vigour and excitement rising up in Canada. With a tumultuous 2025 behind us, we look to a brighter future more defined, determined, and controlled by and for Canada. Certainly, many challenges remain, and new ones are bound to arise. But Canadians are determined and industrious. With focused, thoughtful, and capable leadership across government, technology, industry, academia, finance, health care, and other areas, we can overcome our challenges and grasp opportunities ahead, together.
At RBC PH&N Investment Counsel, we are ready, as always, to embrace this rapidly evolving world, and we are eager to find new opportunities for our clients to build wealth and participate in the resurgence of our great country. This means helping you navigate an ever-increasingly complex world with the right advice and expertise to achieve what matters to you, while also helping you to stay protected in a rapidly digitizing and AI-driven world.
I wish you and your family a very happy 2026!
Sincerely,
Vijay Parmar
President, RBC PH&N Investment Counsel
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