Fiera Capital Global Asset Allocation Monthly Update: October 2026

Fiera Capital expects markets to remain volatile because resilient growth and persistent inflation are forcing central banks to keep policy restrictive while geopolitical and trade risks remain elevated.

• Global equities fell 1.3% in September, while the S&P 500 declined 0.5%, the S&P/TSX 2.8% and the MSCI EAFE 3.3%; the equal-weighted S&P 500 lost 5% despite a 4.4% gain in technology stocks.
• Bond yields rose sharply: the US two-year yield increased 55 basis points to 4.89%, the ten-year yield 53 basis points to 5.28%, and the 30-year yield reached 5.63%, while the Bloomberg US Aggregate Bond Index fell 2.6%.
• The Federal Reserve raised its target range by 25 basis points to 3.75%-4.00% and projected 2026 core PCE inflation at 3.4%, above its June projection of 3.3%; Fiera expects further tightening risks from energy, AI investment and tariffs.
• China faces weak domestic demand: August retail sales stalled and fixed-asset investment plunged, while industrial output benefited from double-digit export growth linked to data-center investment; the government therefore launched its largest stimulus effort in two years.
• Fiera assigns 45% probability to sustained inflation, 30% to stagflation, 15% to recession and 10% to a productivity boom; under the scenarios, US 10-year yields range from 3.00% to 6.00%, WTI from $60 to $80 per barrel, and US forward P/E from 17.0x to 23.0x.

Takeaway: The base case is sustained inflation with slower, trend-like growth and higher-for-longer rates, while investors should retain flexibility because renewed conflict, tariffs and an AI-driven productivity surprise could produce materially different outcomes.