While shifting investor allocations from bonds to cash appeared to be the right move for many during the rate hiking episode, impending rate cuts from the Bank of Canada may indicate it is time to re-allocate back to fixed income. The rates market is anticipating a rate cutting cycle to begin by mid-year, with the first rate cut priced in at the June meeting.2 With a short window between now and then, investors may want to consider the opportunity to seek exposure to what has been the most attractive level of corporate credit yields since the global financial crisis.
End Notes
1 Bloomberg, FTSE. Daily data from 31 December 2021 to 29 December 2023.
2 Bloomberg. June meeting cut based on implied rate from Canada OIS futures prices.
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