Monthly report
Canadian real return bonds underperform in August
Long real return bonds underperformed in August and Canadian nominal government bonds were flat, as the bout of risk aversion in August proved short-lived. Falling inflation, and a less overheated labour market, gave scope for further BoC easing in September. Currency moves were key to August returns, as the USD fell on lower US rate expectations, and yen rallied.
Key highlights:
- Macro and policy backdrop – Soft landing prospects
- Canadian governments – The dis-inversion of the Canadian yield curve remained a feature
- Canadian credit – Renewed risk appetite drives BBBs and Canadian HY performance
- Global yields and spreads – Nominals outperformed as curves mainly bull steepened
- Sovereign and climate bonds – ESG EMGBIC shows lower duration than non-ESG parent
- Performance – Australasian, Japanese and Swedish bonds strongest in August
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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