Monthly report
Credit still in a sweet spot after Fed and BoC policy shift
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Overview
Both the Fed and BoC re-focussed on weaker labour markets in Q3, easing rates. Looser financial conditions and lower rates drove risk asset gains, including credit, despite growth downgrades. HY and financials outperformed. Curves steepened in longs, but 10s/2s curves have stabilised. Credit, munis and provis, all outperformed Canadian governments as spreads fell.
Key highlights:
- Macro and policy backdrop – Fed and BoC rate cuts signal labour market concerns
- US IG and HY credit – Banks perform strongly in IG. Fallen angels becoming rarer?
- Canadian government bonds, provis and munis – Curve steepens in longs, but not mediums
- Canadian IG and HY credit – Credit remains in sweet spot after BoC rate cut
- Performance – Treasuries rallied in Q3, on the Fed rate cut, credit still robust
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.
