The wild Trump card for bond-fund returns

Dynamic managers take cautious stance amid uncertainty over U.S. economic agenda.

Sonita Horvitch 15 February, 2017 | 6:00PM

Michael McHugh, vice-president and head of fixed income at 1832 Asset Management L.P., says that the global fixed-income market is likely witnessing the bottoming of interest rates, after their long secular decline, but there is still considerable uncertainty as to their outlook.

Since the end of September 2016, global bond yields have increased, says McHugh. This is, he says, based both on expectations of higher inflation rates in the developed world and of stronger U.S. economic growth after Donald Trump's election in November as U.S. president.

Canadian bond yields, he says, have largely followed U.S. bond yields higher, but to a lesser extent. "The Canadian economy has been weaker than its U.S. counterpart," says McHugh. "While valuations on bonds on both sides of the border have improved, they remain high from a historic perspective."

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Sonita Horvitch

Sonita Horvitch  

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