Global equity markets continued to be driven by enthusiasm surrounding artificial intelligence and its transformative potential, while investors navigated ongoing geopolitical tensions, trade uncertainty, and evolving interest rate expectations. The Bank of Canada and the U.S. Federal Reserve both held rates steady in July. However, the new Chair of the Federal Reserve's decision to keep rates unchanged sent long-term bond yields sharply higher by month-end.

Overall, equity markets were positive, producing modest gains for the month, although some of the best-performing markets gave back a portion of their strong year-to-date gains. Equity markets initially sold off as concerns emerged around AI-related spending, but rebounded strongly by month-end as robust U.S. corporate earnings momentum continued into this quarter. Volatility remained elevated in emerging markets, particularly in South Korea, where the KOSPI Index fell 38% from its all-time high in June before rebounding 18% in a single day to finish July.

The S&P/TSX Composite Index returned 1.22%, while the S&P 500 declined -1.18% and the Russell 2000 fell -4.31%, in Canadian dollar terms. International equities gained 0.55%, while emerging markets declined -4.74% during the month.

Fixed income markets were negative in July. The FTSE Canada Universe Bond Index returned -1.55%, while the Bloomberg Global Aggregate Bond Index declined -1.92%, with the long end of the yield curve experiencing the greatest pressure.

Looking at currencies, the U.S. dollar depreciated approximately 1.39% against the Canadian dollar in July. This reversed the trend seen through much of the year, during which the Canadian dollar has experienced significant weakness relative to the U.S. dollar. As a result, unhedged U.S. dollar exposures for Canadian investors were negatively affected for the month.

For July, the Balanced Fund returned 0.03%. The Equity Fund returned 0.97%, while the Bond Fund returned -1.02%. The Money Market Fund returned 0.18%.

Disclaimer

The information contained in this market summary is provided for general informational purposes only and is intended to help CSS Pension Plan members understand recent market conditions and the performance of CSS funds. It does not constitute investment advice, and should not be relied upon as the basis for any investment decision.

As a defined contribution plan member, the value of your account and the appropriateness of any particular investment option will depend on your individual financial situation, retirement goals, time horizon, and risk tolerance. Past fund performance is not indicative of future results.

Nothing in this summary should be construed as a recommendation to buy, sell, or hold any investment, or to change your current contribution or investment directions.

If you have questions about your personal account or would like to discuss your individual circumstances, we encourage you to contact a CSS Retirement and Pension Advisor. Our advisors are available to provide guidance tailored to your specific situation.