2025 Q2 Economic and Market Commentary

Key Highlights

  • Policy announcements from the new US administration had a big impact on markets in the second quarter (Q2):
    • US tariff threats shook stock markets, but markets recovered when tariffs were paused;
    • The US government’s plans to cut taxes and increase spending led to a rise in longer-term interest rates.
  • The Canadian economy grew slowly as tariffs began to hurt goods-related industries.
  • Core inflation in Canada remained around 3%, above the Bank of Canada’s target of 2%.
  • Equities rose over the quarter as investors hoped tariffs would be smaller than feared.
  • Short-term bonds outperformed longer-dated bonds as yields rose on long bonds.
  • Looking ahead, there is still a lot of uncertainty around how and when tariffs will be applied, and what their full impact will be.

Short on time? Check out a quick visual summary:

As always, if you have questions or want to review your portfolio, please contact your Encasa advisor.