Happy New Year! Below, you will find our monthly market update and relative information that pertains to the current state of the economy.

Market Update

• Most of the market indices closed higher than the beginning of the month.
  • • The S&P 500 finished at 6,845.50 pts (-0.05%)
    • The DOW finished at 48,063.29 pts (0.73%)
    • The NASDAQ finished at 23,241.99 pts (-0.53%)
    • The TSX finished at 31,712.76 pts (1.05%)

2025 Market Update

• The markets delivered strong returns in 2025. The market indices all closed higher than the beginning of the year.
  • The S&P 500 started at 5,903.26 pts and finished at 6,845.50 pts (+15.96%)
  • The DOW started at 42,660.09 pts and finished at 48,063.29 pts (+12.66%)
  • The NASDAQ started at 19,403.90 pts and finished at 23,241.99 pts (+19.78%)
  • The TSX started at 24,821.15 pts and finished at 31,712.76 pts (+27.76%)

Canada

Monetary Policy

• On December 10^th, The Bank of Canada (“BoC”) decided to leave the overnight lending rate unchanged.
  • Currently, the overnight rate is 2.25%, the Bank Rate is at 2.50%, and the deposit rate is at 2.20%.
  • “If inflation and economic activity evolve broadly in line with the October projection, Governing Council sees the current policy rate at about the right level to keep inflation close to 2% while helping the economy through this period of structural adjustment. Uncertainty remains elevated. If the outlook changes, we are prepared to respond. The Bank is focused on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval.”
  • The first interest rate announcement for 2026 will take place on January 28^th.

Economic Data

• Statistics Canada released Canada’s trade balance after being delayed. Canada’s economy ran a trade surplus of $153 million in September, marking its first surplus since January. Exports rose by 6.3% to $64.2 billion. Imports declined, dropping by 4.1%.
• Canada’s economy added 53,600 jobs in November, surprising economists who were expecting a 2,500 decline.
• Canada’s unemployment rate declined to 6.5% in November from 6.9% in the previous month, economists were expecting an increase to 7.0%.
  • This is Canada’s lowest jobless rate since July 2024.

U.S.

Monetary Policy

• The Fed decided to lower the target range for the federal funds rate by 25bps in its December meeting.
  • The target range for the federal funds rate is 3.50-3.75%.

• “In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.”
• The first Fed meeting in 2026 will take place on January 28^th & 29^th.

Economic Data

• GDP in the U.S. increased at an annual rate of 4.3 percent in the third quarter of 2025 according to the initial estimate released by the U.S. Bureau of Economic Analysis.
  • In the second quarter, real GDP increased 3.8 percent.
• The US unemployment rate increased to 4.6% in November 2025 from 4.4% in September, exceeding market expectations of 4.4% and marking the highest level since September 2021.
• U.S. and China reached a one-year tariff truce in late October, which is expected to increase trade activity between the world’s two largest economies.
  • Despite the agreement, U.S. tariffs on Chinese goods persist as part of the arrangement, but at lower levels than before.

Global

• Europe’s consumer price inflation eased to 2.0% in December 2025, down from 2.1% in November, according to a preliminary estimate.
  • This marks the lowest rate since August, returning to the ECB’s midpoint target and reinforcing expectations that interest rates are likely to remain steady for the foreseeable future.
• Gross domestic product in the U.K. shrank by 0.1% in October, surprising economists who were expecting a 0.1% increase.
  • This marked the second straight contraction for the U.K. economy.
• In Japan, the economy shrank in the third quarter of 2025, but industrial output increased in October, adding to gains in September. Japan’s industrial sector has seen some improvement with a U.S. trade deal in hand, but it has underwhelmed over 2025.

Notes From our Firm

• The Maximum Contributory Earnings for CPP is $71,100
  • Employee and Employer Contribution rate is 5.95% each
  • Maximum Annual Employee and Employer Contributions per year is $4,230.45 each
  • If self-employed your Maximum annual self-employed contribution is $8,460.90
• The Federal EI premium rates and maximums are:
  • The maximum annual insurable earning is $68,900
  • The contribution rate is 1.63% for employees
  • Maximum annual employee premium contribution is $1,123.07/year
  • The contribution rate is 2.28%
  • Maximum annual employer premium contribution is $1,572.30/year
• The 2025 RRSP Contribution deadline is March 14^th, 2026

As always if you have any questions, please feel free to reach out to us. Or, if you know someone who would like an opinion on their investments or insurance, please connect us! There is no better compliment than a referral from one of our current clients.

Yours Truly,

The Team, C.R. Smith Financial

Community, Respect, Service & Financial Integrity