FICC

A falling stock market and sticky bond yields represent the worst of both worlds for investors. We interrogate why bond yields haven’t dropped more given the large selloff seen in equities.

OPEC+ is planning to boost its crude oil output at a time of lingering demand weakness. What is driving this decision? And will Chinese oil consumption – historically a key contributor to global oil demand growth – reaccelerate and justify the coalition’s decision to bring back more supply to the market? This report answers these questions and more.

In this report, we explore the Canadian provincial bond market by developing a model to analyze its main drivers and understand the impact of a potential trade war between Canada and the US.

This report is our Part III series on valuation and subsequent returns, where we recalibrate our short-term models to emphasize signals over the next nine-to-twelve months. We will henceforth call these models STTM: Short Term Timing Models.

Special Report

We attempt to model the term premium in this report with inflation uncertainty, the stock-bond correlation, and “Private Treasury Absorption.” Using our model, we estimate the fair value for the US term premium is 89 basis points above the current level. We also find that fiscal concerns are overrated as a term premium driver and instead, the hedging properties of bonds are more important. Over the cyclical horizon, we continue to recommend an above benchmark duration, given our expectations of an economic slowdown. However, if our term premium estimates are correct, US Treasuries still do not have a high enough risk premia to warrant a large structural allocation in a multi-asset portfolio.

This morning’s employment report showed solid job growth, but recent consumer spending indicators are more concerning. The risk of recession starting within the next few months has increased. We suggest some important indicators for investors to track in the current environment.

The ECB cut rates as expected, but rising yields and a stronger euro are tightening financial conditions just as fiscal policy shifts the macro landscape. With more rate cuts ahead and market positioning stretched, we outline the key risks, investment opportunities, and our updated call on the ECB’s terminal rate. Read our full report for actionable insights.

Our Portfolio Allocation Summary for March 2025.

Core PCE inflation was tame this morning, but with large tariffs looming we anticipate loftier inflation readings in the months ahead.