December update

The Markets (as of close November 27, 2025)

The TSX is up 3.1% in November and up 26.2% year to date

The S&P is down 0.4% in November and up 15.8% year to date

The NASDAQ is down 2.2% in November and up 20.2% year to date

 

From our Portfolio Advisory Group 

Approaching the final stretch of 2025, the Canadian and U.S. economies appear well-positioned to extend their expansions. Strong earnings delivery, a favourable policy mix, and abating trade uncertainty are expected to help bolster growth prospects and support financial markets. We explore these themes in more detail below.

 

Macro Musings

Canada’s economy is on track for a rebound after the sharp contraction in Q2, with the recovery fueled by normalizing trade flows and improving labour market conditions. A pickup in job creation in October helped nudge the unemployment rate lower, while real GDP is projected to rise by 0.5% in Q3 as resilient domestic demand offsets weakness in trade-oriented industries. Looking ahead, momentum is expected to build further, with growth forecast to accelerate to 1.0% in Q4 2025 and reach 1.5% by Q2 2026 before settling near 2.0% in the second half of next year. However, the upcoming USMCA re-negotiation is a key risk we are monitoring that could inject uncertainty into the outlook.

 

South of the border, the U.S. economy remains firmly in expansion mode, with real GDP expected to advance by 2.9% in Q3 before slowing to 1.0% in Q4 and returning to steady pace of around 2% in 2026. Household spending remains the primary driver, with government outlays and business investment also adding modest tailwinds. Although consumers have so far absorbed tariff-related pressures relatively well, recent retail sales data underscore risks tied to an uneven “K-shaped” economy in which spending strength is increasingly reliant on higher-income households. Nevertheless, solid wage gains, strong household balance sheets, and the prospect of lower borrowing costs should help sustain consumption over the coming quarters.

Corporate Fundamentals

A broadly constructive outlook for corporate profits remains an important pillar for equity markets. For both the S&P/TSX Composite and S&P 500, earnings are on pace to grow roughly 13% this year, with another low double-digit increase anticipated in 2026. While valuations remain elevated relative to historical norms—providing a narrower margin of safety against negative surprises—consistent earnings delivery can help companies grow into these valuation levels and provide a fundamental anchor for equity markets to sustain their uptrend over the next 12 months.

 

Central Banks

Market-implied probability for a Federal Reserve rate cut in December has been volatile, influenced by mixed signals from the labour market and policymakers. While markets have largely priced in a 25-basis-point reduction next month, Fed officials are not entirely aligned on the near-term path of rates amid lingering inflation concerns. Looking further out, the futures market reflects expectations for roughly 100 basis points of rate cuts over the next 12 months. In our view, this interest rate path, along with the direction of U.S. bond yields, remains heavily dependent on the evolution of labour market trends, economic growth, and inflation dynamics.

 

In contrast, interest rate expectations in Canada are relatively modest. The 5-year Government of Canada bond yield―a key benchmark for fixed mortgage rates―has drifted lower in recent weeks but remains above levels seen in October ahead of the Bank of Canada’s (BoC) rate cut last month. For now, the BoC has adopted a “holding bias”, with policymakers keen to evaluate the effects of the recently announced federal budget, which should provide some stimulus to the economy. Markets broadly agree, anticipating the policy rate will hold steady at 2.25% over the next year.

Takeaway

Equity markets have continued to climb the proverbial “wall of worry”, delivering worthwhile returns for investors year to date. While risks persist―including U.S. policy unpredictability, rich valuations, and increased market concentration in AI-linked companies―the ongoing economic expansion offers a constructive backdrop for corporate earnings, which should remain supportive into 2026. Balancing the risks and opportunities, we remain invested and diversified, maintaining equity exposure near long-term strategic allocation levels, and prepared for occasional challenges to the global equity market’s three-years-and-counting uptrend.

 

Wealth Management

It’s that time of year for year end tax planning. I have been reaching out to clients particularly with non-registered accounts on their realized gains this year. The markets have been strong and many clients have realized on gains. This is the time to look to see if you have any positions which are showing a loss and to consider triggering that loss to offset your gains. Any trades have to be done by Dec 30 this year to be used for the 2025 tax year. Please keep in mind the superficial loss rule where you cannot rebuy the same security for 30 days for that loss to count. Also a reminder that if you have losses from previous years, these can be carried forward.

If you are in a loss tax bracket this year you may consider an RRSP withdrawal to help spread the taxation from RRSP/RIF income in retirement. Are you receiving a bonus from your employer? Contributing to an RRSP can help offset income and we have until March 1, 2026 to contribute for the 2025 tax year.

Charitable donations can also help with taxes – reminder all donations must be done by Dec 31.

In 2026, people can contribute another $7000 to their TFSA. These accounts are a great way to grow wealth and not pay taxes on that growth. They also bypass probate and tax at death when you have a beneficiary named.

See attached article on year end tax planning.

In the Community and Client Events

We are hosting a seminar entitled Role of the Executor on Thursday Jan 27, 2026 at 12 noon. Our guest speaker is Karen Snowdon-Steacy, Senior Trust Officer, Royal Trust. This event will be in person in our Oshawa boardroom and we will also offer this live via Webex so if you’re interested in joining in from home, we will be sending the link to connect.

We hosted a business owners planning session in Ajax earlier in November. There was plenty of valuable advice around cross border tax strategies, insurance opportunities, even a session on collectibles (jewelry, art, watches) and how to account for these in Estate Planning.

Spencer and I will be volunteering with Durham Children’s Aid on Dec 9 in the morning at the Oshawa Centre helping to wrap gifts. If you’re in the mall that morning, please drop by and say hi.

Our office is supporting a family once again this year through Simcoe Hall settlement house. This family is Mom, Dad and 3 children ages 9, 7 and 6. We will be buying the family gifts, clothes and gift certificates to a grocery store.

Thanks to those who joined us for our virtual cyber security event. There was some valuable advice presented here. If you missed it and want to watch the replay, here is the link.

Bank branches are closed on Dec 25 and 26 for Christmas and Boxing Day and January 1. Our office closes early on Dec 24.

I said this last year but once again I want to truly thank all my clients for trusting me in helping them with their financial situation. I love my job because everyone’s situation is unique and I aim to understand everyone's situation and offer the best possible advice. It’s been another strong year in the markets and it’s a nice feeling when I can present good news and help people. Thank you again for your trust in me.

I wish everyone a safe and happy holiday season and a prosperous and healthy 2026!

Karen L Robertson, FCSI, FMA, CIWM, CIM | Senior Portfolio Manager | RBC Wealth Management | RBC Dominion Securities Inc. | 17 King Street East, 3rd floor Oshawa, ON L1H 1A8 | T. 905-434-8048 | T. 1-800-267-1522 | F. 905-436-5068 | www.KarenLRobertson.com| | My Linked In Profile

Please note that we cannot accept trading instructions by email for regulatory reasons. Please call us to discuss any transactions in your account.

 

Team members:
Spencer Robertson, Associate

spencer.robertson@rbc.com or 905-434-2657