Ninepoint Fixed Income Outlook

In this monthly fixed income commentary preview, Vice President, Portfolio Manager Etienne Bordeleau examines the sharp rise in U.S. bond yields, what higher real yields and term premiums may be signalling, and whether current levels are creating a compelling opportunity for fixed income investors.

Key Topics Covered 

• U.S. Yields Surge – Real yields have climbed to levels typically associated with Fed tightening cycles.
• Why Rates Are Rising – Higher neutral-rate expectations, fiscal deficits and heavy debt issuance are pushing yields higher.
• U.S. Growth Risks – AI spending is supporting growth, but its contribution may weaken as costs rise.
• Labour Market Weakness – Falling participation and softer employment data suggest more weakness beneath the surface.
• Adding U.S. Duration – We modestly increased U.S. duration through options as yields became more attractive.
• Canada Stays Short – Improving growth supports higher yields, so Canadian duration remains relatively low.
• Selective on Credit – Heavy hyperscaler issuance remains a headwind, reinforcing a cautious approach to credit.
• Portfolio Positioning – Portfolios yield roughly 5%–6%, with added U.S. duration and limited credit risk.