Monthly report
Tariff impact dents risk rally but credit largely unscathed
Canadian government yields fell further in February, on the growth impact of US tariffs on Canadian exports, though the risk that reciprocal tariffs may push up Canadian inflation tempered the decline in yields. US Treasuries outperformed, especially long maturities, which gained 5.1% in Canadian dollars, despite the weaker US dollar. HY credits were modestly positive, despite the flight to quality.
Key highlights:
- Macro and policy backdrop – Tariffs weigh on global growth
- Canadian governments – Curve steepening stalls as markets digest tariff impact
- Canadian credit – Early signal of risk aversion?
- Global yields and spreads – Mini flight to quality underpinned US Treasuries rally
- Sovereign and climate bonds – Green bond universe is heavily underweight USD
- Performance – Long duration outperformed
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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