Market and economic commentary
October 2025
Global markets continued their powerful rally in October, reaching new highs as rate cuts from the US Fed and Bank of Canada provided support. While the US economy shows strong signs of accelerating growth, Canada faces domestic and international trade challenges.
October market gains driven by rate cuts
Global markets continued their strong upward path in October, with many global indices striking new highs. This persistent rally has been broad-based, with every region posting positive returns. Market sentiment was further supported by 25 bps rate cuts from both the US Federal Reserve (Fed) and the Bank of Canada (BoC). The earnings cycle continues to impress with Q3 S&P 500 results outperforming expectations once again.
Portfolio performance and key benchmarks
All Compass Portfolios and ATBIS Pools (the Funds)1 saw positive performance over the month, with Canadian markets serving as the primary driver of returns. Up-to-date performance data for the Funds can be found here.
Below are index total returns in Canadian dollar (CAD) terms for October:
| Index | October 2025 |
|---|---|
| S&P/TSX Composite Index | 1.0% |
| S&P 500 Index | 3.1% |
| MSCI EAFE Index | 1.9% |
| FTSE Canada Universe Bond Index | 0.7% |
Source: Bloomberg, FTSE Russell
Canada: Trade headwinds and a golden lining
The Canadian economy continues to tread water, with signs pointing to weak or flat Q3 GDP growth. On the trade front, Canada remains a major partner to the US but lacks a new trade deal post Liberation Day. Tensions have increased as Canada and the US have moved further from a deal after a controversial World Series advertisement. Other countries appear to be leveraging Canada’s position; India announced a 30% tariff on yellow peas from Canada. This is in addition to a 100% tariff from China (effective March 2025). Together, these two countries account for over 70% of Canadian pea exports.
The one silver lining for Canada has been the precious metal sector, particularly gold. Driven by heightened global demand for gold from central banks, physical gold prices have soared over 50% year-to-date. With 40% of the world’s mining companies listed on the TSX and TSX Venture Exchange, these Canadian-listed companies have been natural beneficiaries of rising commodity prices. Compass Portfolios maintain a positive outlook on gold equities and have initiated a position in the GDX (VanEck Vectors Gold Miners ETF) to gain targeted exposure to the sector.
US growth and earnings continue to soar
The US economy is in a strong expansion phase, with growth accelerating into year-end. The latest real-time indicators from the Atlanta Fed suggest GDP growth could approach 4%, an exceptional number for an economy of its size. Corporate earnings continue to soar, with Q3 results (based on 62% of the S&P 500 reporting) outperforming expectations on both revenues (+7.5% YoY) and earnings (+14% YoY). Market leadership has expanded beyond the mega-caps, as sales growth has been broad-based with all sectors beating expectations. The government shutdown has been a non-issue for the economy and markets thus far. Despite the Fed’s cautious “data-dependent” language, the market interpreted the October 25bps cut—the second consecutive one—as clear confirmation that an easing cycle is underway.
A divergent path for international markets
Europe continues to struggle with growth, as some of the larger economies, like Germany, face near-recessionary conditions. Corporate earnings growth in this market has been light to non-existent, and investment inflows have slowed since the second half of the year. In contrast, growth in the Emerging Markets is accelerating. This has been supported by strong economic results, policy tailwinds, and robust earnings across emerging market countries.
Navigating a tight-spread environment
Fixed income markets remain in positive territory for the month. The rate cuts from both the BoC and the Fed have helped the longer end of the yield curve outperform. Credit spreads were flat this month in both investment grade and high yield space. With spreads near historically tight levels, there is an expectation they will normalize (widen) at some point. This presents limited upside for further tightening, making the sector less compelling from a value perspective. For the time being, the robust US earnings cycle has maintained the status quo, helping companies maintain their debt service obligations.
Compass Portfolios Series F1 - Returns net of fees
|
|
October 2025 |
1 year |
3 year |
5 year |
10 year |
|
Compass Conservative Portfolio |
0.55% | 7.95% | 8.98% | 5.60% | 5.63% |
|
Compass Conservative Balanced Portfolio |
0.79% | 10.55% | 10.79% | 7.00% | 6.43% |
|
Compass Balanced Portfolio |
0.96% | 12.04% | 11.97% | 8.65% | 7.44% |
|
Compass Balanced Growth Portfolio |
1.10% | 13.94% | 13.34% | 9.99% | 8.31% |
|
Compass Growth Portfolio |
1.23% | 15.69% | 14.78% | 11.37% | 9.05% |
|
Compass Maximum Growth Portfolio |
1.54% | 18.76% | 16.89% | 12.82% | 9.86% |
Source: ATB Investment Management Inc.
ATBIS Pools Series F1 - Returns net of fees
|
October 2025 |
1 year |
3 year |
5 year |
Since inception* |
|
|
ATBIS Fixed Income Pool |
0.38% | 5.33% | 6.43% | 3.20% | 3.68% |
|
ATBIS Canadian Equity Pool |
0.01% | 16.90% | 14.86% | 14.72% | 7.83% |
|
ATBIS US Equity Pool |
2.01% | 12.62% | 15.80% | 13.69% | 12.12% |
|
ATBIS International Equity Pool |
1.71% | 21.44% | 18.16% | 9.41% | 7.79% |
*Inception date: September 22, 2016
Source: ATB Investment Management Inc.
1 Using F series returns
This report has been prepared by ATB Investment Management Inc. (ATBIM). ATBIM is registered as a portfolio manager across various Canadian securities commissions, with the Alberta Securities Commission (ASC) being its principal regulator. ATBIM is also registered as an investment fund manager and manages the ATB Funds, Compass Portfolios and the ATBIS Pools. ATBIM is a wholly owned subsidiary of ATB Financial and is a licensed user of the registered trademark ATB Wealth.
The performance data provided assumes reinvestment of distributions only and does not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that may reduce returns. Unit values of mutual funds will fluctuate and past performance may not be repeated. Mutual Funds are not insured by the Canada Deposit Insurance Corporation, nor guaranteed by ATBIM, ATB Securities Inc. (ATBSI), ATB Financial, the province of Alberta, any other government or any government agency. Commissions, trailing commissions, management fees, and expenses may all be associated with mutual fund investments. Read the fund offering documents provided before investing. The Compass Portfolios includes investments in other mutual funds. Information on these mutual funds, including the prospectus, is available on the internet at www.sedarplus.ca.
Past performance is not indicative of future results. Opinions, estimates, and projections contained herein are subject to change without notice and ATBIM does not undertake to provide updated information should a change occur. This information has been compiled or arrived at from sources believed reliable but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. ATB Financial, ATBIM and ATBSI do not accept any liability whatsoever for any losses arising from the use of this report or its contents.
This report is not, and should not be construed as an offer to sell or a solicitation of an offer to buy any investment. This report may not be reproduced in whole or in part; referred to in any manner whatsoever; nor may the information, opinions, and conclusions contained herein be referred to without the prior written consent of ATBIM.