February 27, 2026
Video Commentary
February 2026
In this monthly fixed income commentary preview, Vice President, Portfolio Manager Etienne Bordeleau recaps the key market developments from February and early March, including widening credit spreads, rising bond yields, private credit stress tied to software exposure, and the growing market impact of renewed conflict in the Middle East.
As volatility picks up across credit, rates, equities and commodities, Etienne explains how these risks are affecting fixed income markets and how we’ve positioned our portfolios with capital preservation in mind.
Key Topics Covered:
- Credit Spreads Move Wider – After starting February near all-time lows in Canada and the U.S., credit spreads widened as market complacency faded.
- Private Credit & Software Contagion – Weakness in software names exposed broader risks in private credit, leveraged loans and life insurers with significant U.S. private credit exposure.
- AI Risk Meets Credit Fragility – Two major 2026 risks identified earlier this year—AI-driven market distortions and cracks in U.S. private credit—began to converge.
- Middle East Conflict Drives Volatility – Renewed war in the Middle East pressured risk appetite globally, pushing equities lower, credit spreads wider and crude oil prices higher.
- Bond Yields Rise Sharply – Higher oil prices lifted inflation expectations, reducing the odds of rate cuts and contributing to a meaningful selloff in bond markets.
- Defensive Portfolio Positioning – We entered the year cautious on both rates and credit, with low duration, credit hedges and pair trades designed to protect capital in volatile conditions.
- Focus on Capital Preservation – In an increasingly uncertain market environment, our fixed income approach remains centered on preserving client capital while seeking stable, acceptable returns.