Monthly report
Canadian bonds de-couple from Treasuries as G7 growth divergences increase
Canadian disinflation and a slight slowdown in the labour market allowed Canadian govt. bonds to de-couple from the October Treasury sell-off. Global economic fragmentation may explain increased growth and inflation dispersion in this cycle. Treasuries, gilts and JGBs were the weakest markets in October, as short Bunds, and Euros outperformed.
Key highlights:
- Macro and policy backdrop – Higher yields tightened policy and allowed BoC to extend policy pause
- Canadian governments and credit – Canadian yields de-coupled from the sell-off in Treasuries in October
- Global yields and spreads – Signs of capitulation in long Treasury sell-off, as US sovereign spreads widen
- Sovereign and climate bonds – US weakness narrowed performance gap between climate WGBI and WGBI
- Performance – Another weak month for longs in October led by the US, gilts and JGBs, as Canada de-couples
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.
For specialist content on a range of investment topics, including macroeconomic analysis and how it affects market performance and multi-asset analysis, viewed through our indices and data, explore our Global Investment Research hub.
Webinar
Learning to live with higher rates, or an inflation glitch?
November 9, 2023 - 3pm GMT / 10am EDT
Robin Marshall
Paul Bowes
Hear the answers to key questions facing the Canadian fixed income market in 2024:
- Has the Canadian bond market fully re-priced for the end of zero rates?
- Is the Bank of Canada in danger of over-tightening policy in pursuit of an unrealistic 2% inflation target?
- After another year of death by duration, should investors prepare to go back to a world in which re-invested coupons and carry supplant duration as key drivers of bond returns?
You will hear 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.
The discussion will draw upon key findings from our Fixed Income Insights (Canada) report, published shortly before this webinar.
