Monthly report
Canadian government bonds front-run BoC easing, despite caution on early pivot
Global bond markets rallied in November after US, Eurozone and Canadian inflation fell, suggesting the cyclical peak in rates may be at hand, despite central bank caution on early policy pivots. Long Canadian AAA corporates, provincial bonds and conventional bonds gained nearly 9-10% in November.
Key highlights:
- Macro and policy backdrop – Soft landing seems in sight for G7 economies, including Canada, as rates peak
- Canadian governments and credit – Falling inflation reassures bond markets and signals possible peak in rates
- Global yields and spreads – Yield curves re-inverted as markets anticipate policy easing
- Sovereign and climate bonds – EM ESG saw a strong recovery in 2023
- Performance – Long dated gilts and Bunds led the November rally, in reversal of the Q3 and October sell-off
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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