Weekly Market Pulse - Week ending August 22, 2025
Market developments
Equities: Wall Street experienced a mixed week with initial flatness giving way to some slippage, particularly in tech stocks, as investors awaited the Jackson Hole comments from Jerome Powell. The dovish comments on Friday helped erase the loses from the week and drove the S&P 500 Index into positive territory for the week.
Fixed Income: The shape of the U.S. Treasury yield curve remained a key point of discussion, with its U-shape suggesting that current Federal Reserve rates might be high relative to expectations for the next 2-3 years. Longer-end rates implied that investors were still demanding a premium due to rising fiscal deficits and long-term inflation. After Fed Chair Powell’s comments around a potential rate cut on Friday morning, we saw yields shift down across the curve, with 2-year Treasury Yields dropping over 10bps.
Commodities: This week saw notable volatility in commodity prices, with energy markets experiencing mixed outcomes. Crude oil prices rebounded slightly, while gold saw slight gains as investors sought safe havens amid fluctuating equity markets.
Performance (price return)
SECURITY |
Price |
Week |
1 month |
3 month |
YTD |
Equities ($Local) |
|
|
|
|
|
S&P/TSX Composite |
28,333.13 |
1.53% |
3.54% |
9.59% |
14.58% |
S&P 500 |
6,466.91 |
0.27% |
2.49% |
10.70% |
9.95% |
NASDAQ |
21,496.54 |
-0.58% |
2.89% |
13.58% |
11.32% |
DAX |
24,363.09 |
0.02% |
1.34% |
1.52% |
22.37% |
NIKKEI 225 |
42,633.29 |
-1.72% |
7.19% |
15.27% |
6.86% |
Shanghai Composite |
3,825.76 |
3.49% |
6.81% |
13.18% |
14.14% |
Fixed Income (Performance in %) |
|
|
|
|
|
Canada Aggregate Bond |
235.70 |
-0.11% |
0.20% |
0.21% |
0.14% |
US Aggregate Bond |
2284.19 |
-0.03% |
0.60% |
2.86% |
4.35% |
Europe Aggregate Bond |
245.63 |
0.27% |
-0.48% |
0.71% |
0.77% |
US High Yield Bond |
28.30 |
-0.11% |
0.43% |
3.35% |
5.48% |
Commodities ($USD) |
|
|
|
|
|
Oil |
63.81 |
1.61% |
-3.62% |
4.26% |
-11.03% |
Gold |
3371.41 |
1.06% |
-1.75% |
2.33% |
28.46% |
Copper |
446.30 |
-0.66% |
-21.66% |
-3.99% |
10.84% |
Currencies ($USD) |
|
|
|
|
|
US Dollar Index |
97.73 |
-0.12% |
0.35% |
-2.23% |
-9.91% |
Loonie |
1.3825 |
-0.04% |
-1.59% |
0.23% |
4.04% |
Euro |
0.8532 |
0.15% |
-0.29% |
3.90% |
13.21% |
Yen |
146.94 |
0.17% |
-0.21% |
-1.99% |
6.98% |
Source: Bloomberg, as of August 22, 2025
Central Bank Interest Rates
Central Bank |
Current Rate |
December 2025 |
Bank of Canada |
2.75% |
2.51% |
U.S. Federal Reserve |
4.50% |
3.78% |
European Central Bank |
2.00% |
1.83% |
Bank of England |
4.00% |
3.86% |
Bank of Japan |
0.50% |
0.66% |
Source: Bloomberg, as of August 22, 2025
*Expected rates are based on bond futures pricing
Macro developments
Canada – Inflation Eases, Retail Sales Expected to Drop
The annual inflation rate in Canada fell to 1.7% in July, down from 1.9% in June and below forecasts of 1.8%. This marks the fourth month below the BoC's 2% target. Gasoline prices significantly dropped, contributing to a 2.5% rise in other prices. Grocery and shelter costs increased, with core inflation steady at 3%. The CPI rose by 0.3% in July.
Retail sales in Canada are projected to fall by 0.8% in July, reflecting the impact of uncertain U.S. trade policies. Despite a sharp increase of 1.5% in June, core retail sales rose significantly, driven by beverage, supermarket and clothing sales, alongside higher gasoline turnover despite lower prices.
U.S. – Composite PMI Shows Strength
The S&P Global U.S. Composite PMI rose to 55.4 in August, marking strong growth for the 31st month. Services maintained solid expansion, while manufacturing rebounded significantly. Input costs surged, leading to the highest increase in selling prices in three years, though business sentiment remained cautious.
International – U.K. Inflation Surges, Eurozone Inflation Stable, Eurozone Composite PMI Improves, Japan's Private Sector Growth, Japan's Inflation Declines
The annual inflation rate in the U.K. rose to 3.8% in July, the highest since January 2024, exceeding expectations. Transport costs were the main factor, driven by a surge in airfares. Additional increases occurred in restaurant and food prices, while housing inflation eased. The CPI rose by 0.1% monthly, contrasting with forecasts for a decline.
In the Eurozone, the annual inflation rate remained steady at 2% in July, matching flash estimates. Price growth for services slowed, but non-energy goods and food prices increased. Core inflation held at 2.3%, the lowest since January 2022, indicating stability in the economy.
Japan's S&P Global Composite PMI rose to 51.9 in August, indicating continued growth in the private sector. This expansion was supported by factory output and services activity. However, export orders declined and input price pressures intensified, though output price inflation eased.
Japan's annual inflation rate eased to 3.1% in July, the lowest since November 2024. Prices for electricity and education fell, while food prices surged, particularly for rice. Core inflation matched the headline rate at 3.1%, with a steady monthly CPI increase.
Quick look ahead
DATE |
COUNTRY / REGION |
EVENT |
|
SURVEY |
PRIOR |
28-Aug-25 |
United States |
GDP Annualized QoQ |
2Q S |
3.1 |
3.0 |
28-Aug-25 |
United States |
Personal Consumption |
2Q S |
1.6 |
1.4 |
28-Aug-25 |
United States |
GDP Price Index |
2Q S |
2.0 |
2.0 |
28-Aug-25 |
United States |
Core PCE Price Index QoQ |
2Q S |
2.6 |
2.5 |
28-Aug-25 |
Japan |
Retail Sales YoY |
Jul |
1.6 |
2.0 |
28-Aug-25 |
Japan |
Retail Sales MoM |
Jul |
(0.1) |
1.0 |
29-Aug-25 |
United States |
PCE Price Index MoM |
Jul |
0.2 |
0.3 |
29-Aug-25 |
United States |
PCE Price Index YoY |
Jul |
2.6 |
2.6 |
29-Aug-25 |
United States |
Core PCE Price Index MoM |
Jul |
0.3 |
0.3 |
29-Aug-25 |
United States |
Core PCE Price Index YoY |
Jul |
2.9 |
2.8 |
29-Aug-25 |
Canada |
Quarterly GDP Annualized |
2Q |
(0.3) |
2.2 |
29-Aug-25 |
Canada |
GDP MoM |
Jun |
0.2 |
(0.1) |
29-Aug-25 |
Canada |
GDP YoY |
Jun |
1.3 |
1.2 |
S = Second
The Asset Allocation Team at NEI Investments
Judith Chan, CFA – Vice President, Head of Asset Allocation
Mateo Marks, CFA – Director, Asset Allocation
Adam Ludwick, CFA – Director, Asset Allocation
Anthony Rago, B.A.Sc. – Senior Asset Allocation Analyst
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