July 03, 2025

Fixed Income Insights (Canada) - July 2025

Monthly report

Curve steepens as longs underperform

Geopolitical tensions, tariff uncertainty and higher oil prices created a volatile environment for global fixed income in Q2, with investors navigating between risk-off and risk-on assets. Shorts outperformed longs, though returns were largely driven by currency moves. Canadian credits were up 1-2%, benefitting from the recovery in equity markets.

Key highlights:

  • Macro and policy backdrop - Tariffs impact Canada’s labour market
  • Canadian governments - Curve steepening continues
  • Canadian credit – What Tariffs, what geopolitical tensions?
  • Global yields and spreads – Global yields fall in June
  • SI bond analysis – Duration and sector weights drive SI Corp relative performance
  • Performance – FX moves drive performance in Q2; longs extend losses

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.

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