Natixis Canada Blog

Updates:


Bonds Break Out of Their Trading Range, With Prices Moving Higher and Yields Declining in April

 

Jeff Herold
Jeff Herold, Portfolio Manager, NexGen Canadian Bond Funds

Following four months of sideways movement, bonds broke out of their trading range in April, with prices moving higher and yields declining. In large part, the catalyst for lower yields was the flagging optimism about the U.S. economy. The combination of weaker than expected economic data, the chaotic performance of the new Trump administration, and the inability of the U.S. Republican Party to agree on major policies such as the repeal of Obamacare, caused investors to lose confidence in the anticipated economic acceleration from the implementation of Trump’s election promises. Canadian bond yields lowered, following U.S. bond yields. The FTSE TMX Canada Universe Bond index returned 1.43% in April.

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Canadian Bond Market Remarkably Stable in March

 

Jeff Herold
Jeff Herold, Portfolio Manager, NexGen Canadian Bond Funds

The Canadian bond market was remarkably stable in March, as a federal budget, a rate increase and legislative turmoil in the U.S. and the United Kingdom’s decision to exit the European Union were taken in stride by investors, with each event having minimal impact on the market. Bond yields in Canada and the United States remained within their respective trading ranges which began in early December. The FTSE TMX Canada Universe Bond index returned 0.41% in March.

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Canadian Bond Market Seesaws in February as Yields Rise Then Fall Twice in the Month

 

Jeff Herold
Jeff Herold, Portfolio Manager, NexGen Canadian Bond Funds

The Canadian bond market moved in a seesaw pattern in February, with yields rising and then falling twice in the month. The bond market remained in the trading range that began in December, once the market had initially reacted to the surprise U.S. presidential election result. The market’s focus remained on the new U.S. administration, as the correlation between Canadian and U.S. bond yields was very high. Investors were hoping for greater clarity on the new government’s fiscal, regulatory and trade policies. The economic consensus remained optimistic, with risk premia (yield spreads) for provincial and corporate bonds shrinking and the U.S. stock market continuing its post-election rally. The FTSE TMX Canada Universe Bond index returned 0.96% in February.

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