Your Financial Review October 2021

Cathy Duval |

Autumn Headwinds


The summer of 2021 may be remembered as the moment when certain assumptions related to the COVID-19 pandemic were called into question, including the assumption that mass vaccination alone would allow a rapid return to pre-pandemic reality. The most recent data from Israel has shaken that outlook.

Without being totally reversed, the economic recovery already underway in advanced economies may slow down to allow time for the authorities in place to complete their vaccination campaign or administer booster doses to their populations.

In emerging economies, the Delta variant wave will be felt in different ways. Although general lockdowns are rather rare in emerging countries, the deterioration of the health situation could temporarily lower household confidence, a phenomenon reinforced by the insufficiency / absence of budget support.

The topic of inflationary pressures should continue to be of concern to markets. In sum, the most likely scenario in this environment of numerous uncertainties and conflicting forces remains a gradual cooling of inflation toward a level that will nonetheless be higher than in recent years. However, beyond the path inflation ultimately takes, a key factor for the stock and bond markets will always be what central banks do in parallel.


Market Review: Highlights as of September 30


Fixed Income

  • The Canadian bond market’s performance (FTSE CA Universe) has been in negative territory since the beginning of the year (-4.0%), with a drop of 0.5% in the third quarter.
  • The 10-year Canadian bond rate fell in the last quarter due to growing fears about the Delta Variant and the global economic slowdown.


Stock Markets

  • Most equity markets have performed well since the beginning of the year, aside from the recent decline of emerging markets. At the top of the list is the Canadian market (S&P/TSX Composite) which posted a gain of 17.5%, followed by the American market (S&P500) with a gain of 15.9% * and the international equity market (MSCI EAFE) with 8.8% *. As for the emerging markets (MSCI EM), they posted a loss of 1%* year-to-date.
  • Despite its positive annual performance, the S&P 500 fell in September. Experiencing its first monthly decline since January 2021. The other major exchanges also experienced declines in the month of September, although generally less pronounced than in the United States. For its part, the decline in the Canadian stock market (S&P/TSX) proved to be the least severe of the group.


* S&P 500, MSCI EAFE and MSCI EM returns are expressed in US dollars.


Oil and Gold

  • The price of WTI oil (US $ / barrel) is up 55.7% year-to-date, ending September at its highest level in three years.
  • For its part, the price of gold (US $ / ounce) has weakened 7.2% year-to-date.



  • The US dollar had climbed to its highest level of the year at the end of the quarter (1.27 Canadian dollars to 1 US dollar). It was supported by the prospect of higher interest rates and the most recent wave of new cases of COVID in many OECD economies *. The uncertain resolution of a major property developer’s bankruptcy in China (Evergrande) also strengthened the greenback.
  • Despite the surge in energy goods, the Canadian dollar weakened in the last quarter. In fact, as of September 30, 2021, 1 Canadian dollar represented 0.79 dollars, which is equivalent to a decline of 2.24% since the end of June.


*Organisation for Economic Co-operation and Development.


Investment Outlook


A gradual deceleration in growth over the next few months is to be expected without, however, being negative. Against this backdrop, equity markets should continue to outperform more defensive bonds as interest rates may continue to rise. However, more volatility and more modest performances are to be expected for the stock markets.


If you have any questions, please feel free to contact us.


We hope your summer has gone well and we wish you a beautiful and colourful fall!


Cathy and Sounda

514 871-3474

Disclaimer: I have written this commentary to give you my opinion on various investment solutions and considerations that may be relevant to your investment portfolio. This comment reflects my opinion only and may not reflect those of National Bank Financial Group. In expressing these opinions, I endeavor to apply my judgment and professional experience to the best of my ability from the perspective of a person called upon to follow a wide range of investments. Therefore, this report represents my informed opinion and not a research analysis produced by the Research Department of National Bank Financial. National Bank Financial is an indirect wholly owned subsidiary of National Bank of Canada. National Bank of Canada is a public company listed on the Toronto Stock Exchange (NA: TSX). National Bank Financial is a member of the Canadian Investor Protection Fund (CIPF).