Canadian bonds continue to outperform on a relative basis, with yields rising less across the curve, likely reflecting softer economic growth and less pronounced inflationary pressures, according to Desjardins Economic Studies in a note.
Investors also demand less compensation to hold long-term Canadian debt, giving Canadian bonds an edge over US Treasuries, where sticky inflation, larger fiscal deficits and uncertainty over Fed policy have increased volatility at the long end, wrote the bank's Vice-President, Chief Economist and Strategist Jimmy Jean and Macro Strategist Tiago Figueiredo in Monday's note.