March 05, 2024

Fixed Income Insights (Canada) - March 2024

Monthly report

Canadian bonds show resilience on 3M, despite back-up in yields in Q1

Both Canadian government and corporate bonds still show modest gains across maturities over three months. Equity market outperformance helped drive further credit gains, led by high yield, as the risk rally continued and similarities with the Goldilocks era increase. China and EM remain safe havens in government bonds.

Key highlights:

  • Macro and policy backdrop – Goods inflation fell sharply but policy easing awaits lower services inflation
  • Canadian governments – Strong demand for Canadian provincials and municipals keeps spreads below pre-Covid levels
  • Canadian credit – Financials dominate the Canadian IG sector, unlike the Canadian HY universe
  • Global yields and spreads – Bear inversion continued in February
  • Sovereign and climate bonds – Green sovereigns underperformed in February due to extra duration
  • Performance – Canadian governments show gains on 3M, despite the G7 yield back-up in Q1

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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