Markets at the intersection of rates, AI and geopolitical risk

January 2026

Markets opened the year with a cautious tone as shifting interest-rate expectations drove performance across asset classes. Equity returns were mixed, with volatility increasing as higher bond yields weighed on growth stocks, while value-oriented and cyclical sectors showed relative resilience. U.S. equities were choppy, Canadian markets benefited from commodity strength, and international developed equities benefited from a softer U.S. dollar. Emerging market performance was uneven, with gains in parts of Asia offset by underperformance in Latin America and rate-sensitive markets as higher global yields weighed on capital flows. Fixed income faced modest pressure as government bond yields rose, leading to slightly negative returns for longer-duration assets, though credit markets remained stable, supported by carry and contained spreads.

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This material is for informational and educational purposes and is not intended to provide specific advice including, without limitation, investment, financial, tax, or similar matters. This document is published by AFI and, unless indicated otherwise, all views expressed in this document are those of AFI. The views expressed herein are subject to change without notice as markets change over time. Views expressed regarding a particular industry or market sector should not be considered an indication of trading intent of any funds managed by NEI Investments. Forward-looking statements are not guarantees of future performance, and risks and uncertainties often cause actual results to differ materially from forward-looking information or expectations. Do not place undue reliance on forward-looking information.

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