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.
- 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.
Learning to live with higher rates, or an inflation glitch?
November 9, 2023 - 3pm GMT / 10am EDT
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.