Canadian Bonds vs the World
Igor Manukhov - Nov 15, 2024
Due to more aggressive rate cutting, Canadian bonds have been outperforming their US and global counterparts.
Last week, we looked at the relative performance of stocks across different regions. Today, I wanted to do the same for bonds, given that fixed income plays a major role in many portfolios. The charts below show two relative strength lines. The green chart compares US bonds to Canadian bonds, where a falling line indicates the outperformance of Canadian bonds vs US bonds. The red chart represents the relative performance of global bonds to Canadian bonds, with the falling line again indicating a Canadian outperformance.
As it stands, the Canadian bond market has been outperforming its global counterparts. That is why, in our portfolios, we have been focusing on local markets until these trends reverse. This is serves as another example of the power of relative strength analysis—it enables investors to allocate their attention and resources to stronger-performing areas.
