In November, the Canadian bond universe reversed a trend of positive monthly returns. The overall DEX Universe Bond Index returned -1.1% in November reducing the year to date (YTD) return to less than 7%.
Both governments and corporates posted negative returns across the yield curve with the governments performing slightly better at the short end of the curve and corporates outperforming in the mid and long sections of the curve. Overall, short dated securities outperformed for the month but the long end of the curve has outperformed for the year.
Here are the numbers:
November YTD
Universe: -1.1% 6.6%
Universe (Gov’t): -1.1% 6.4%
Universe (Corp); -1.1% 7.0%
Short Term: -0.6% 3.4%
Short Term (Gov’t): -0.6% 3.2%
Short Term (Corp); -0.7% 4.1%
Mid Term: -1.7% 7.5%
Mid Term (Gov’t): -1.8% 7.4%
Mid Term (Corp); -1.7% 7.8%
Long Term: –1.4% 12.3%
Long Term (Gov’t): -1.5% 11.8%
Long Term (Corp); -1.0% 13.9%
For the month, we note that yields rose across the entire yield curve particularly in the 2-10 year portion of the curve as follows: 26 basis points for the 2 year bond, 45 basis points for the 5 year bond and 33 basis points for the 10 year bond.
Current Yields (as at November 30th):
1 Month: 0.9%
1 Year: 1.3 %
5 Year: 2.4 %
10 Year: 3.1%
Long: 3.5%
The Bank of Canada held its overnight rate at 1% at its December 7th meeting, therefore the Prime Rate in Canada remains at 3% (3.25% in US). There are no more Bank of Canada meetings scheduled for 2010 with the next meeting taking place on January 18, 2011
