Monthly report
Policy easing starts to support long government bonds
Download the latest reports
Overview
Some evidence lower rates are helping longs, as well as shorts, emerged in October. The BoC took out more recession protection by easing rates beyond neutral but the Fed rate cut also reduces the risk of a sharper slowdown during a data blackout. The extent of yen undervaluation versus PPP and widening rate differentials in its favour are of note. Strong Latam currencies drove EM outperformance and reflect favourable tariff outcomes.
Key highlights:
- Macro and policy backdrop – Weaker labour markets drive easing but pause now likely
- US IG and HY credit – Fed easing extends credit sweet spot, against benign backdrop
- 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 – Shorter Bunds and gilts lead returns in USD and CAD on 1M and YTD
From October 2025, we have combined the US Fixed Income Insights and Canada Fixed Income Insights reports into a consolidated North America Fixed Income Insights edition. The new monthly North America edition will analyse the Global and North American macro backdrop, and cover the latest developments in the US and Canadian sovereign bond 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.
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.
