August 2026 - Monthly Update

Hi,

 

Hope this note finds you and your family well as the summer rolls on.

 

Your investment portfolio posted gains again in July. It remains with positive performance over the last twelve months.

 

North American stock market performance varied in July. In Canada, the index retained a positive tone while significant headwinds experienced by the technology sector translated to stock markets in the United States (U.S.) moving down to breakeven. Bond markets were lower across the board as the level for long-term interest rates moved higher.

 

Data reflecting the wider North American economy remains constructive. The most recent report from the U.S. commerce department census bureau recorded new orders for key U.S. manufactured capital goods increased strongly in June. Shipments reached the highest level since December 2021 as businesses increased spending. The broad increase in the core capital goods orders and shipments last month was powered by robust demand for computers and electronic parts, as well as electrical equipment, machinery, appliances, and components.

 

The private sector remains in a strong position financially as reflected by the most recent round of corporate earnings and guidance for the year ahead.

 

Our investment strategy remains steady and unchanged: Own a diversified set of high-quality North American stocks aligned with the growth trajectory of the U.S. domestic economy and complimented with a selection of Canadian corporate bonds.

 

You and your wealth are in a strong and sustainable position.

 

The view from Brent Joyce, BMO Wealth’s Chief Investment Strategist:

“Among all the month’s developments, the Middle East and trade fronts were largely more of the same. The change in tone and procedure at the Fed was new information to digest. In addition to the overnight rate and use of their balance sheet to intervene in bond markets, another tool central bankers can use is talk, or jawboning in the economic and political lexicon. However, talk is cheap. Chair Warsh is running through his allowance quickly although he’s getting results. It is believed – and borne out by his vote – that Mr. Warsh does not want to raise the fed funds rate. He is a consummate academic and understands that the bond market can tighten financial conditions on his behalf; even better, the bond market has greater flexibility and no reputation to protect. For now, that is exactly what the Fed has been able to achieve: lower bond yields at the short end of the spectrum (the front of the yield curve) and higher yields at longer-dated maturities. These moves impacted stocks and bonds negatively, but Mr. Warsh may think because markets are on a good run it’s a small price to pay in order to advance his goals. For now, Mr. Warsh is content with this outcome. If his approach goes too far, it may not be wise for the medium-term health of the U.S. economy or stock market. In fact, the opposite might be needed – higher short rates and lower long bond yields. To achieve that, the Fed will need to see very good outcomes (and soon) on productivity or inflation. Both could happen, but if not then jawboning will need to be backed up by action. Otherwise, Mr. Warsh risks overplaying his hand. We think a less transparent Fed is a good thing; reserving forward guidance for emergencies makes it more powerful. Allowing capital markets to digest information and provide price discovery without central bank guidance is a return to normal. The capital market reactions showed us that old habits die hard. We lean toward the view that the men and women in charge at the Fed (all of them, it isn’t a one-person show) won't push these issues so far that they upset the economy or markets too much, which would be at odds with their goals. Although the last few months have been choppy, fundamentals have improved: inflation cooled more than expected in many countries while employment and growth held up (especially in Canada). Corporate earnings continue to deliver. Shocks can come and go – July saw them come, but they can also fade quickly. Meanwhile, resilient capital markets and economies soldier on."

Portfolio Strategy – August 2026. BMO Capital Markets.

 

• Stocks in your portfolio that made a new 52 week high this past month: (Bank of Nova Scotia*, Canadian Pacific KS Rail*, Manulife*, Sun Life*) Canadian National Rail*, Emera*, Fortis*, Johnson & Johnson*, Morgan Stanley*, Royal Bank*, TD Bank* & United Health*

• Stocks in your portfolio that made a new 52 week low this past month: Oracle*, Telus* (BCE*)

• The Loonie gained one cent versus the U.S. dollar to $0.71

 

Thank you,

Ian, Gab, Kaitlyn, Naina, and Meeral