Introduction

Global equity markets finished slightly lower in May. Investors treaded cautiously amid uncertainty about an agreement on the U.S. debt ceiling, while inflationary pressures persisted, raising expectations central banks might be forced to keep hiking interest rates. The U.S. Federal Reserve Board (“Fed”), European Central Bank (“ECB”) and Bank of England (“BoE”) all raised rates during the month.

Data released during the month revealed the real estate markets in Canada and the U.S. gained momentum with higher sales and climbing prices. The pause by the Bank of Canada (“BoC”) and expectations that the Fed might also pause helped lift demand for real estate on both sides of the border. In Canada, the pullback in real estate over the past year has weighed heavily on economic growth. The recent rebound could influence the BoC’s upcoming decisions, particularly with mortgage costs pushing inflation higher.

In Canada, the S&P/TSX Composite Index declined, hindered by weakness in the Energy and Materials sectors. U.S. equities, as measured by the MSCI USA Index, finished higher over the month. Yields on 10-year government bonds in Canada and the U.S. finished higher but experienced wide swings amid uncertainty about the U.S. debt ceiling. Gold prices finished lower, as did the price of oil.

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