Monthly report
More Canadian yield de-coupling from US
Higher Canadian yields in October and curve steepening, despite a 50bp BoC cut, appears a paradox, but Canadian yields de-coupled further from the sharp rise in US yields. Increased fiscal activism in the UK and China signals a shift away from reliance on lower rates, driving G7 term premia higher, on issuance fears. Credit remains in a sweet spot, notably BBBs, gaining from lower rates, improved growth prospects and high outright yields.
Key highlights:
- Macro and policy backdrop – US and Canada projected to grow 2%+ in 2025
- Canadian governments – Canadian curve disinverts and returns to pre-Covid structure
- Canadian credit – Long Canadian corporate yields prove attractive
- Global yields and spreads – G7 curves bear steepen as term premia rise
- Sovereign and climate bonds – Quality matters
- Performance – Long Canadian corporates among top performers
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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