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TD Wealth Market Insights: October 2025 Snapshot

Source: Morningstar, TD Wealth Chief Investment Office. Indices used include the Bloomberg US Treasury TR Index, Bloomberg US Aggregate Bond TR Index, Bloomberg US Corp Bond TR Index, Bloomberg US Treasury US TIPS TR Index, Bloomberg Municipal TR Index, Bloomberg US MBS Float Adjusted TR, S&P 500 TR Index, Russell 1000 Growth TR Index, Russell 1000 Value TR Index, Russell 2000 TR Index, MSCI EAFE NR Index, and the MSCI EM NR Index. All performance is in U.S. dollars. Past performance is not indicative of future results. The indices are a tool to compare the performance of one or more indices. The volatility and performance of the indices may be greater than or less than the volatility and performance of actual investments. Indices reflect the reinvestment of dividends and income. Indices do not have fees, expenses or taxes, which would lower performance. Indices are unmanaged and not available for direct investment.

Monthly Market Brief Commentary – October 2025

  • 1

    Positive Momentum: Financial markets posted broad monthly gains in October as positive momentum in the information technology sector helped to lift domestic equities higher. While the S&P 500 Index of large cap U.S. companies continued to record fresh highs, emerging and international developed markets also advanced for the month. Major fixed income markets again added to year-to-date performance in October with notable gains generated by municipal bonds and mortgage-backed securities. Although investors may be cautious about adding capital around all-time highs, history shows that staying invested, and continuing to put money to work, has rewarded discipled investors over the long-term.

  • 2

    Choice Cuts: The Federal Reserve followed through with a second consecutive rate cut in October, bringing the policy rate lower by 25bps to a target range of 3.75-4%. Chair Powell, however, tempered expectations for the future direction of rates. With the current government shutdown quickly approaching the longest on record, the central bank is operating without the usual guidance of official economic data. TD Wealth currently expects the policy rate to trend gradually lower this year and into 2026. As in previous easing cycles, short-term yields have compressed, and we believe cash-heavy investors should consider a broader range of asset classes to help meet their longer-term financial goals.

  • 3

    Under Pressure: Heighted trade tensions with China resurfaced in mid-October with the largest drawdown for global markets since the tariff-driven volatility in April. In response to China expanding its export controls on rare-earth minerals, the Trump administration threatened to escalate the trade war with a further 100% tariff on Chinese imports. Cooler heads ultimately prevailed resulting in an agreed one-year trade truce between the U.S. and China. This episode served to highlight the importance of continued progress in reaching longer-term deals with key U.S. trading partners.

 TD Wealth Asset Allocation Views – November 2025

  • Equity – Modest Overweight

    • Global equity markets are up year-to-date, as tariff risks appear manageable, and earnings trends remain positive.
    • We remain overweight equities; while there could be bouts of volatility as valuations have expanded, government policy is increasingly pro-business, central banks are accommodative, and earnings growth remains positive

  • Fixed Income – Modest Underweight

    • As market-based inflation expectations remain anchored, the Federal Reserve can continue to lower its policy rate to preempt further loosening of the labor market.
    • Therefore, we expect that bonds will continue to provide stable income and preserve capital.   

  • Cash & Equivalents - Neutral

    • Recent economic trends suggest an increasing chance of transitory below trend growth.
    • Considering this, cash can help to enhance liquidity and provide optionality to capitalize on better valuation opportunities that may emerge. Cash rates are expected to ease as short-term rates fall, but declines should be gradual.

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Forward Looking Statements  

Certain statements in this document may contain forward-looking statements (“FLS”) that are predictive in nature and may include words such as “expects”, “anticipates”, “intends”, “believes”, “estimates” and similar forward-looking expressions or negative versions thereof. FLS are based on current expectations and projections about future general economic, political and relevant market factors, such as interest and foreign exchange rates, equity and capital markets, and the general business environment, assuming no changes to tax or other laws or government regulation or catastrophic events. Expectations and projections about future events are inherently subject to risks and uncertainties, which may be unforeseeable and may be incorrect in the future. FLS are not guarantees of future performance. Actual events could differ materially from those expressed or implied in any FLS. A number of important factors including those factors set out above can contribute to these digressions. You should avoid placing any reliance on FLS. We may not update any FLS. The indices are a tool to compare the performance of one or more indices. The volatility and performance of the indices may be greater than or less than the volatility and performance of actual investments. Indices reflect the reinvestment of dividends and income. Indices do not have fees, expenses or taxes, which would lower performance. Indices are unmanaged and not available for direct investment.

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Investing involves market risk, including possible loss of principal, and there is no guarantee that investment objectives will be achieved. Past performance is not guarantee of future results. Asset allocation/diversification does not guarantee a profit or protect against a loss. 

Equities may decline in value due to both real and perceived general market, economic industry conditions, and individual issuer factors. Investing involves market risk, including possible loss of principal, and there is no guarantee that investment objectives will be achieved. Past performance is not guarantee of future results. Asset allocation/diversification does not guarantee a profit or protect against a loss. 

Bonds are affected by a number of risks, including fluctuations in interest rates, credit risk, prepayment risk, and inflation risk. Corporate debt securities are subject to the risk of the issuer’s inability to meet principal and interest payments on the obligation and may also be subject to price volatility due to factors such as interest rate sensitivity, market perception of the creditworthiness of the issuer and general market liquidity. High yield, lower-rated securities are subject to additional risks such as increased risk of default and greater volatility because of the lower credit quality of the issues. Interest on municipal bonds is generally exempt from federal tax. However, some bonds may be subject to the alternative minimum tax and/or state or local taxes. 

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