Monday Market Minute | Dec 29, 2025
Looking ahead to 2026: stable BoC rates, gradual tariff normalization, and structural tailwinds position Canadian private markets for another strong year.
What Moved
As the final trading week of 2025 closed, market consensus for 2026 crystallized around three themes. First, the BoC was expected to hold rates near current levels through at least H1, providing a stable base for return projections. Second, tariff normalization — partial but meaningful — was anticipated as political and economic pressures moderated the US administration's stance. Third, Canadian private markets were entering 2026 with full pipelines, proven resilience, and strong institutional support.
Why It Matters
For alternative investments allocators, the 2026 setup was favorable. Private credit would operate in a stable rate environment with persistent bank-displacement tailwinds. Real estate would benefit from continued housing recovery and the early stages of office-to-residential conversions. PE would deploy growing dry powder into a domestic economy that had adapted to trade friction. Infrastructure would capture ongoing government investment in supply chain resilience and energy transition. The lesson of 2025 — that Canadian private markets are structurally advantaged in volatile periods — provided conviction for increased allocation.
Signal to Watch
The pace of trade normalization in Q1 2026 would be the single most important variable. A meaningful tariff reduction would unlock cross-border deal flow that had been suppressed for a year, expanding the opportunity set for every private market asset class.