October 3, 2025
With the arrival of fall – with shorter, cooler days and vivid colours – we’re reminded that change brings both beauty and reflection. Much like the fall harvest, recent economic developments are the result of seeds planted months ago.
In the U.S., early-year tariff threats led to a series of trade agreements this quarter with the EU, Japan, South Korea, the UK, and others. The economy showed mixed signals: tech remained a bright spot, while agriculture, housing, and manufacturing softened.[i] Consumer spending held steady but has started to weaken under the weight of higher prices, mortgage rates, and uncertainty.
As of writing, markets have surged, initially on AI optimism and later on better-than-expected earnings. However, valuations in some sectors have reached historic highs.[ii] Despite August’s 2.9% inflation, the Federal Reserve cut rates to 4.00–4.25% on September 17, citing a softening labour market.[iii] Looking ahead, we remain cautious given inflation pressures, policy risks, trade tensions, and geopolitical uncertainty. In short: U.S. growth isn’t over—but it’s no longer a given.
In Canada, we’ve narrowly avoided a technical recession, though key indicators like manufacturing and housing starts remain weak.[iv] The Bank of Canada also cut rates on September 17, down to 2.5%.[v] Still, gold and resource sector strength—driven by global demand—has helped markets hold firm and the Canadian dollar to rise.[vi] Risks around labour, trade with the U.S., and business sentiment keep us cautious. Our Canadian equity exposure remains focused on high-quality dividend payers.
International developed markets— namely, Europe, Japan, and South Korea—are showing the most compelling fundamentals. With lower valuations, tamer inflation[vii], lower interest rates, fiscal stimulus, and corporate reforms (notably in Japan)[viii], these markets offer both growth and diversification away from U.S. tech concentration. Accordingly, we’ve been selectively increasing exposure in these regions.
Sincerely,
The Momentum Wealth Team
References
[i] The U.S. economy is running even hotter than previously thought, and GDP growth could reach 4% in Q3 | Fortune
[ii] Markets in third quarter: The calm after the storm
[iii] Federal Reserve cuts US interest rates for first time since December | Federal Reserve | The Guardian
[iv] Canada’s GDP rebounds in July after three months of contraction | Reuters
[v] Canadian manufacturing PMI falls in September as downturn deepens | Reuters
[vi] Gold becomes new force driving the Canadian dollar | Financial Post
[viii] Japan’s Corporate Reforms Boost Shareholder Value in 2025 | J.P. Morgan Asset Management
Death & Taxes:
It was almost 250 years ago that Benjamin Franklin wrote the now-famous reflection that, “…in this world nothing can be said to be certain, except death and taxes.”, yet this past week, an article about an Ontario couple’s terminal and estate tax liability has gone viral. Read about it here.
For financial planners, this is not news. We often review tax liabilities with clients to recommend strategies to mitigate or offset them. Curious where you stand? Check out this calculator for a high-level view of your family’s tax liability at death.
