Staying Disciplined Amid Global Uncertainty

Blair Setford - Jul 07, 2025

Our Perspective with Blair Setford

In his Q2 2025 market update, Blair Setford, AVP of Product Development with Canada Life Investment Management Ltd., highlights a volatile start to the quarter, driven by newly imposed tariffs that triggered a global sell-off in equities and bonds.

Despite this rocky beginning, markets rebounded in May, with the S&P 500 posting its strongest May performance since 1990. Still, the index remains flat year-to-date—one of its weakest starts in decades.1

Blair notes that U.S. equities are underperforming global peers, while Canada’s S&P/TSX and other global benchmarks reached new highs by mid-June. This recovery was supported by easing trade tensions and reduced recession fears.

However, he also emphasizes that uncertainty remains high. Inflation is still elevated, trade disputes are unresolved, and geopolitical risks—particularly in the Middle East—are intensifying. These factors suggest continued market volatility.

In Canada, the Bank of Canada held its policy rate at 2.75% for a second consecutive time. Blair explains that this reflects concerns over U.S. trade policy, a soft domestic economy, and the potential for inflation to return. The Bank has indicated it may resume rate cuts if conditions worsen.2

Looking Ahead

Blair expects markets to remain headline-driven. Tariffs could reignite inflation and slow growth, while geopolitical tensions are pushing energy prices higher. Central banks are pausing rate changes as they await clearer economic signals.

Investment Strategy

Blair also stresses the importance of diversification. Canada Life Investment Management Ltd. Portfolio managers are maintaining a neutral portfolio allocation, avoiding concentrated bets and preparing for a return to more stable growth. This approach aims to balance risk and opportunity.

He concludes by encouraging investors to stay disciplined. Volatility is unsettling, but long-term success depends on sticking to a well-structured investment plan.

Sources:
1. Yahoo Finance. Friday May 30, 2025. Stock market today: S&P 500 marks best May in 30 years as Wall Street bets on tariff relief.
2. Source: Bloomberg
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