October 2026 Market Update
Positioned for a Changing Market
Market Overview
September produced mixed results across equity markets as investors weighed economic data, interest-rate expectations, and continued trade uncertainty.
In the United States, strength in technology shares helped support the Nasdaq, while higher bond yields weighed on other sectors. In Canada, the S&P/TSX Composite declined 2.9%, while the Dow Jones fell 4.0%, ending a five-month streak of gains. Energy and telecommunications stocks offered some support, but mining and several other sectors remained under pressure
Inflation and Interest Rates
Inflation in Canada remains above the Bank of Canada’s target, with the latest reading showing prices rising 3.0% year over year in August. The Bank of Canada held its overnight rate at 2.25%, citing uncertainty surrounding energy prices, tariffs, and the outlook for economic growth.
Although economic activity has moderated, Canada’s economy continues to show resilience. Statistics Canada reported that GDP was unchanged in July, while preliminary estimates pointed to modest growth in August. Overall, the environment supports a cautious but constructive outlook for investors.
September Markets and SilverBirch’s Portfolio Positioning
Why Traditional Diversification May Fall Short
One article that particularly resonated with me this month was a recent Globe and Mail article featuring economist David Rosenberg, titled “The Dirty Little Secret About a 60/40 Portfolio and Why It No Longer Works.”
Rosenberg challenges the long-held belief that a traditional portfolio of 60% equities and 40% fixed income automatically provides sufficient diversification. In today’s market, stocks and bonds can be affected by many of the same forces, including inflation, interest rates, and economic uncertainty. Investors may therefore be taking on more risk than they realize, even when they believe they are adequately diversified.
Our Portfolio-Building Approach
At SilverBirch, this reinforces an investment philosophy we have followed for many years: clients should not be placed into a standard asset-allocation model. Instead, we build portfolios around each client’s goals, income needs, risk tolerance, and time horizon.
Equally important, we consider the purpose of every investment within the portfolio—whether it is intended to generate income, preserve capital, provide liquidity, reduce volatility, or support long-term growth.
Depending on a client’s needs, a portfolio may combine cash, fixed income, dividend-paying companies, Canadian and international equities, and selective diversifiers such as gold. We also carefully assess interest-rate sensitivity and concentration risk across sectors and asset classes.
Portfolio Change: Enbridge
During September, we sold Enbridge. Although the company continues to generate attractive income, concerns about elevated debt levels, higher financing costs, and a more modest growth outlook led us to conclude that capital could be allocated more effectively elsewhere.
As always, portfolio decisions are made with a focus on balancing income generation, risk management, and long-term growth.
Supporting Retirement Income
Many client portfolios are designed to support retirement income. For that reason, our focus remains on generating dependable income while managing risk appropriately—not simply chasing returns. Our goal is to help clients preserve capital, maintain their lifestyle, and participate in long-term growth opportunities.
Looking Ahead
As we move through October, we will be watching several key themes:
The Bank of Canada's October interest rate announcement and updated economic outlook.
Inflation, employment, and consumer spending trends.
Canada-U.S. trade developments and tariff discussions.
Corporate earnings, bond yields, and energy prices.
Markets will continue to respond to new information and changing economic conditions. Although volatility is always possible, our approach remains consistent: we will continue to focus on risk management, sustainable income generation, and long-term opportunities aligned with our clients’ financial goals.
Thank you for your continued trust and confidence. If you have questions about your portfolio or financial plan, please do not hesitate to contact our team.
With Kind regards,
Your SilverBirch Wealth Management Team
