Monthly report
Long end draws support from rate cuts, less issuance
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Overview
Statistical fog may not prevent another Fed easing in December, as the labour market suggests US policy remains restrictive. Q3’s growth rebound and easier policy rates reduce pressure on the BoC to ease again in Q4, after fiscal easing in November. Long government bonds have drawn support from reduced supply in Q4, as curves stabilise, and rate cuts, but credit remains the star performer YTD, plus the Eurozone periphery, due to convergence trades.
Key highlights:
- Macro and policy backdrop – Weak labour markets leave scope for Dec rate cuts
- US IG and HY credit – Tight credit spreads, though outright yields offer protection
- Canadian government bonds, provis and munis – Yield attractions tighten Provis and Munis spreads
- Canadian IG and HY credit – IG spread tightening most pronounced in longs
- Performance – Longs recover in Q4, but underperform YTD. USD weakness dominates
From January 2026, our North American and Europe monthly Fixed Income Insights will be replaced by North American and Europe quarterly Fixed Income Insights. The Quarterly reports will be published in January, April, July and October, and will provide in-depth research and analysis of global and regional macro-economic developments, and how they are impacting sovereign bonds, inflation-linked, currency and credit markets.
These reports provide actionable insights on global fixed income markets. They cover shifts in global yield curve and credit spreads, across sovereign, inflation-linked and corporate indices, and FX-adjusted return performance using proprietary month-end data from our global fixed income indices.
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