This mid-year update covers H1 2025 fixed income volatility from trade and global economic uncertainty. It details the BoC's two rate cuts and the Fed's steady approach, alongside Moody's downgrade of US debt to AA due to tariffs and deficits.
This mid-year update covers H1 2025 fixed income volatility from trade and global economic uncertainty. It details the BoC's two rate cuts and the Fed's steady approach, alongside Moody's downgrade of US debt to AA due to tariffs and deficits.
Fiscal stimulus remains an upside risk to growth in both Canada and the U.S.. Government bonds remain attractive heading into the second half of the year. Corporate bond holders are not being compensated as much for taking on corporate credit risk, with spreads at near 20-year lows, although all-in yields look attractive.
We maintain a positive view of fixed income as it appears rates have peaked, growth trajectories are slowing (making less risky assets relatively more appealing), and yields are starting the year at an attractive level. We believe this could cause the yield curve to re-steepen and lead to less inverted, or even positive, sloping curves.
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