Global Asset Allocation Team Market Update – October 2026
The third quarter ended on a softer note, with unrelenting concerns about elevated oil prices, sticky inflation, and the subsequent spike in bond yields weighing on financial market valuations and investor sentiment. Investors were also navigating a tumultuous geopolitical and trade backdrop that added to the cautious mood even as economic growth and corporate profitability held firm. Financial market conditions remain volatile to say the least. Both stocks and bonds slid lower in September.
Global equity markets (-1.3%) retreated in September. The S&P 500 edged modestly (-0.5%) lower, with robust results across the technology (+4.4%) sector offsetting widespread losses elsewhere across the benchmark. Market breadth was extremely weak – with the equal-weighed index losing -5%. The S&P/TSX declined -2.8% amid steep losses in the heavyweight energy (-4.2%) and materials (-7.5%) space. Gold stocks tumbled nearly -9%. Elsewhere, the MSCI EAFE fell -3.3% – while the MSCI gauge of emerging market stocks shed -0.8%.
Fixed income markets also generated negative results as continued signs of economic resilience and lingering inflationary pressures prompted a hawkish-leaning pivot at major central banks and sent global bond yields soaring higher. Treasury yields pushed to multi-year highs. The two-year treasury yield jumped 55 basis points to 4.89% – while the ten-year yield soared 53 basis points to 5.28% – its highest level since 2007. Yields on 30-year treasuries hit 5.63% – the highest in more than two decades. These moves spilled over into markets worldwide – sending a gauge of global bond yields to the highest since 2007. For the month, the Bloomberg US Aggregate Bond Index declined -2.6% – while the FTSE Canada Bond Universe shed -1.2%.
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