Equity markets had a weak outing in September as headline indices moved lower month-over-month (m/m), reflecting persistent macroeconomic headwinds. Inflationary pressures remained elevated, while rising long-term bond yields and ongoing geopolitical uncertainty weighed on investor sentiment. August inflation readings remained elevated at 3.0% and 3.4% year-over-year for Canada and the US, respectively. Central bank policies diverged during the month: the Bank of Canada held its policy rate steady at 2.25%, while the US Federal Reserve cut rates by 0.25%.

The S&P/TSX Composite Index declined 2.6% m/m, while the S&P 500 Index gained 2.1% in CAD terms (vs. -0.5% m/m in USD) as investors continued to favor tech-sector heavyweights and AI hyperscalers. Within Canada, the resources sector was a relative bright spot, supported by rising oil prices. The Russell 2000 Index, a measure of US small-capitalization stocks, declined 3.0% in CAD terms, while international markets, represented by the MSCI EAFE and MSCI EM indices, returned -0.7% (CAD) and +1.9% (CAD), respectively.

In the fixed income market, higher yields weighed on m/m returns across the curve, with the largest decline observed at the long end. The FTSE Canada Long Term Bond Index declined 1.9% m/m, compared with declines of 0.7% for short-term bonds and 1.4% for medium-term bonds. The FTSE Canada Universe Bond Index declined 1.2%. The Bloomberg Global Aggregate Bond Index also declined 2.4% in USD but was flat in CAD terms.

Commodities recorded mixed results. Crude oil prices surged, supported by the unresolved conflict in the Middle East, while precious metals declined due to capital flows into higher-yielding bonds. WTI crude oil increased by about 7.6%, while gold dropped by 6.6%. From a currency perspective, the U.S. dollar appreciated by 2.3% against the Canadian dollar during the month. This provided a meaningful tailwind to unhedged U.S. dollar exposures for Canadian investors and helped offset weaker underlying U.S. dollar returns in some global markets.

Against this backdrop, the Balanced Fund returned -0.5% for the month. The Equity Fund returned -0.8%, while the Bond Fund returned -1.1%. The Money Market Fund returned 0.1%.

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.