Real Return Bonds Show Resilience

Long Canadian real return bonds showed resilience amid a sell-off in May, says FTSE Russell’s June 2022 ‘Canadian Fixed Income Insight Report.’ Canadian conventional bonds made modest gains or losses in May, reversing months of sharp declines. Tightening financial conditions globally and recession concerns have spurred investors to reassess their interest rate and inflation expectations as most central banks prioritized controlling inflation over economic growth, it says. As well, G7 central banks prioritized inflation over growth, reflecting increased concerns over the risk of inflation becoming entrenched.