Monthly report
Canadian bonds gain on rate cuts and risk-off rally in Q1
Global financial markets continued to be affected by concerns over tariffs, and stagflation in March. Policy uncertainty and the gold price surged amidst a flight to quality in safe havens, though notably not the US dollar. Short governments outperformed, gaining 2-5% in CAD in Q1, while longs were more mixed but gained from FX moves. Corporate bonds held up well, despite evidence of spreads widening in lower quality credits in March.
Key highlights:
- Macro and policy backdrop – Growth trade-off between tariffs and fiscal stimulus?
- Canadian governments – Canadian yield curve steepens in March
- Canadian credit – Canadian credits benefit from higher quality profile
- Global yields and spreads – Steepening curves
- Sovereign and climate bonds – Risk-off rally lift US Treasuries
- Performance – Uncertainty, rate cuts and currency moves drive bond rally in Q1
This report provides actionable insights on currency-adjusted performance, macro drivers, shifts in yields, spreads and curves across conventional, inflation-linked and corporate bonds within the Canadian fixed income market.
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