Ninepoint Fixed Income Outlook

In this month’s Fixed Income Video Preview, Etienne Bordeleau, Fixed Income Portfolio Manager at Ninepoint Partners, breaks down the evolving interest rate outlook in Canada and the U.S., the growing uncertainty around Federal Reserve leadership, and why historically tight credit spreads are forcing a more tactical, hedged approach across our fixed income portfolios. 

Key Topics Covered:

• Bank of Canada on Hold – Inflation is back near target, housing disinflation is building, and barring USMCA renegotiation risks, the BOC is likely to stay paused.
• Fed Leadership Transition Risk – With Chair Powell in place until May and Kevin Warsh expected to step in, the June FOMC meeting could mark a pivotal shift toward rate cuts.
• U.S. Political Influence on Policy – How White House pressure and Senate proceedings could shape the pace and probability of lower U.S. rates.
• Yield Curve Steepening Theme – We believe Canadian and U.S. curves remain too flat and continue positioning for further steepening.
• Credit at “Nosebleed” Valuations – Investment grade spreads in Canada and the U.S. are near all-time tights, reflecting relentless demand for income.
• Hedging Credit Risk Strategically – Using credit default swap indices similar to a “collar strategy” to reduce downside risk while preserving carry.
• Lower Volatility, Consistent Carry – How our structured hedges aim to keep returns more rangebound while protecting against spread widening.
• Portfolio Positioning Update – A fund-by-fund look at how we’re balancing income generation with prudent risk management.