Week Ending March 1, 2026

Policy Divergence Widens as Credit Spreads Test Multi-Year Tights

Policy Rates

🇨🇦
0.00%
BoC
🇺🇸
0.00%
Fed
🇪🇺
0.00%
ECB
🇬🇧
0.00%
BoE

At a Glance

Updated 3 min ago
🇨🇦 10Y
0.00%
0bps
🇺🇸 10Y
0.00%
0bps
IG Spread
0bps
Neutral
HY Spread
0bps
Tight
Duration: Bullish
Credit: Cautious
Quality: Positive

Key Takeaways

📈
Rates: Policy divergence accelerates with BoC signaling additional 50bps easing versus Fed's extended pause. Canadian 5-7Y government bonds offer compelling value at 2.72% versus fair-value estimates near 2.45%.
🏦
Credit: Investment grade spreads at 78bps test post-crisis lows while fundamentals deteriorate. Quality differentiation critical with Canadian banks preferred given superior 15.2% average Tier 1 capital ratios.
🛡️
Hedging: Duration positioning remains constructive at 6.5Y target emphasizing Canadian government exposure. Credit allocation trimmed to 22% from 25% given late-cycle vulnerabilities and $340B refinancing cliff.

Significant Moves

↑
US 10Y Treasury+11bps
4.19%→4.26%

Reflects growing market concern about inflation persistence limiting Fed easing

↓
IG Credit Spreads-6bps
79bps→73bps

Further tightening to decade lows increases vulnerability to reversal

View Shifts

TD
TD Securitiesoutlook
Constructive on duration→Constructive with hawkish B...

Added caution on BoC policy trajectory while maintaining duration preference

BL
BlackRockcredit
Agency MBS very cheap→Agency MBS significantly un...

Increased conviction on MBS vs corporate credit relative value opportunity

New Calls

NEW

Scotiabank projects 50bps BoC hikes to 2.75% by H2 2026 as inflation persistence emerges

NEW

PIMCO increases conviction on agency MBS as 'significantly undervalued' vs IG corporates

NEW

Goldman Sachs maintains two Fed cuts in 2026 despite market pricing just one

View Full ReportCharts, analysis, and portfolio implications

Previous Issues

View all →

February 22, 2026

Duration Divergence Accelerates as Canadian Curves Outperform Policy Shift

→

February 15, 2026

Canadian Yields Rise as BoC Signals Extended Pause, Credit Spreads Hold Tight

→

February 12, 2026

Central Banks Pivot Hawkish as Inflation Proves Stickier Than Expected

→

February 8, 2026

Central Bank Pause Extends as Inflation Settles into Target Range

→