Bonds Poised to Benefit from BoC and Fed Easing
According to Adam Ditkofsky, senior portfolio manager at CIBC Asset Management, the Bank of Canada and U.S. Federal Reserve are expected to continue supporting growth with lower interest rates.
Ditkofsky predicts three rate cuts from the BoC over the next 12 months, with the overnight rate reaching 1.75%, and 125 basis points in additional cuts by the Fed, with the policy rate falling to 3%.
This is good for bonds, as it implies lower yields, especially in the shorter-dated bonds.
He notes that with yields close to 4% to 5%, investors should expect returns of around that range over the medium to longer term in the bond market.
For the full conversation, listen to the Advisor To Go podcast, powered by CIBC Asset Management.
Author's summary: Bonds may benefit from expected rate cuts.