Ninepoint Fixed Income 2026 Outlook

In this month’s Fixed Income Video Preview, Portfolio Manager Etienne Bordeleau shares Ninepoint’s outlook for fixed income markets heading into 2026, including why we believe the rate-cut cycle is largely complete, why yield curves in Canada and the U.S. are likely to re-steepen, and how higher bond yields and wider credit spreads could create more attractive all-in income opportunities for bond investors.

Key Topics Covered:

• Bank of Canada on Hold – We believe the BoC has completed its rate-cut cycle, setting the stage for yield-curve re-steepening and higher long-term rates.
• U.S. Federal Reserve Outlook – Political uncertainty, a potential leadership change, and late-cycle dynamics may lead to further volatility in U.S. rate policy.
• Yield Curve Re-Steepening – Higher 5-, 10-, and 30-year yields could improve reinvestment opportunities for fixed income investors.
• Record Credit Issuance – 2025 saw the highest issuance on record in Canada, with expectations for even more supply in the U.S. driven by AI-related capex and M&A.
• Credit Spreads at Historic Tights – With spreads near pre-GFC levels, we expect modest widening as leverage increases and issuance accelerates.
• Improving All-In Yields – Higher base rates and wider spreads may enhance income potential across fixed income portfolios.
• Defensive Positioning – We remain cautious, prepared to reinvest further out the curve as yields rise and spreads adjust.
• Key Risks for 2026 – USMCA renegotiation, fiscal stimulus, inflation re-acceleration, political interference in monetary policy, and U.S. labour-market dynamics.