As 2025 winds down, both global and Canadian markets are adjusting to slower growth, changing trade dynamics, and the next phase of interest-rate moves. While we are witnessing a new boom in tech via AI and elevated geo-political noise, we are also seeing a return to a more balanced environment with inflation, interest rates, and balance sheets normalizing to historical trends.

Global Overview

  • The global economy continues to grow modestly—about 3% annually—despite trade tensions and political uncertainty.
  • Inflation has cooled in most regions, giving central banks room to start easing rates.
  • However, trade realignment, geopolitical risks, and uneven growth across regions remain challenges.

United States

  • The U.S. economy remains resilient, supported by consumer spending and strong corporate earnings, particularly in technology and AI-related sectors. Consumer spending is bifurcated – the top 10% are supplementing the decreased spending of the bottom 90%.
  • Inflation has eased toward the 2% target, allowing the Federal Reserve to begin modest rate cuts after two years of restrictive policy.
  • Employment growth has cooled but remains healthy, while business confidence is steady despite ongoing trade and political uncertainty.
  • U.S. equities continue to lead global markets, though valuations are stretched and gains remain concentrated in a few large tech firms. Technology and AI remain strong growth drivers, keeping U.S. markets near record highs.

Canada

  • The Bank of Canada cut rates to 2.25%, reflecting softer growth and inflation now near 2.4%.
  • GDP contracted slightly last quarter, and unemployment has risen above 7% with trade frictions and weak business investment continue to weigh on the economy.

Market Strategy

In our view, diversification and quality remain key. Global growth themes still offer opportunity, but we need to balance growth exposure with stability and income.

  • Equities: Our focus remains on quality, cash-flow-positive companies; and we are staying selective in cyclicals sectors. While US equity offers growth potential, diversifying some of the gains away from mega-cap tech is important to portfolio stability, and equity in developed countries outside of North America are promising.
  • Fixed Income: Higher yields make bonds more compelling again for balanced portfolios, but riskier bonds are not necessary for returns with spreads widening out.

If you’d like to review your portfolio positioning or discuss how these shifts may affect your business or family wealth plan, please reach out.

Sincerely,

The Momentum Wealth Team

References

[i] https://www.imf.org/en/Publications/WEO

[ii] https://www.oecd.org/economic-outlook/

[iii] https://www.worldbank.org/en/publication/global-economic-prospects

[iv] https://www.bea.gov/

[v] https://www.federalreserve.gov/monetarypolicy.htm

[vi] https://am.jpmorgan.com/

[vii] https://www.bankofcanada.ca/publications/mpr/

[viii] https://www150.statcan.gc.ca/

[ix] https://www.blackrock.com/institutions/en-us/insights/outlook

Budget Summary

Budget 2025 – Canada Strong was presented in the House of Commons on November 4, 2025.

We created a summary of the most relevant proposed changes below. Most noteworthy is what was left out of the Budget – there was little in the way of personal and small business tax changes proposed, with no changes proposed to personal or corporate tax rates.  Some other proposals are outlined below:

  1.  Personal Measures
    • Automatic tax filings will commence with the 2025 tax year for low-income Canadians
    • Extension of the top-up credit from 14.5% to 15% (the tax rate at which tax credits are applied)
    • Eligible personal support workers working for eligible health care establishments will be entitled to a 5% tax credit
    • Investments in small business, venture, and specified cooperative corporations that are currently permitted in RRSPs, TFSAs, DPSPs, RESPs, RRIFs, LIFs, FHSAs will be extended to RDSPs. Certain investments in LLPs and small business trusts would no longer be eligible for these accounts (subject to grandfathering).
    • Changes to the 21-Year Deemed Disposition Rule for trusts that extends the anti-avoidance rules.
  1. Business Measures
    • Accelerated CCA on certain asset acquisitions
    • Tax incentives related to the clean economy were modified
    • To prevent tax deferrals related to a refundable dividend tax share dividends are paid within a corporate group an anti-avoidance measure was introduced
    • International Measures: Transfer pricing rules and requirements were revised
  1. Sales & Excise Measures
    • Underused Housing Tax was eliminated
    • Luxury tax on vessels and aircraft were removed.  The tax on vehicles remains.
  1. Filing Measures
    • Tax filing for bare trusts deferred until 2026 tax year
    • Expanded filing requirements for non-profit organizations deferred to 2027 tax year

References: The Stikeman Elliott Federal Budget Commentary 2025 | Business Law firm | Stikeman Elliott

In other news…

  • Momentum Financial is proud to be partnering with the Townsend Smith Foundation on a free financial and estate-planning session discussing how to plan for helping children, grandchildren and your community without negatively impacting your retirement. Join us at 7 PM on December 2nd at the Norval United Church by saving your seat here.
  • Headed to the US for the winter? Make sure to review the new rules for Canadians visiting for more than 29 days here.