Canadian bond yields moved higher in April, with the largest increases occurring in mid and long-term bonds. The yields of 2 and 5-year Canada Bonds rose 7 and 15 basis points, respectively, while 10 and 30-year yields increased 19.5 and 17.5 basis points, respectively. The changes in long term Canadian yields were similar to the moves in the U.S. mid and long-term bonds but yields on 2 and 5-year US bonds increased more than 20 basis points.

The federal sector returned -0.70% in April as higher yields pushed bond prices lower, while the provincial sector returned -1.26% in the month. The longer average duration of provincial bonds resulted in the sector’s weak performance despite provincial yield spreads tightening 3 basis points on average. In contrast, the corporate sector declined only -0.55% in the period. After widening 8 basis points in March corporate yield spreads tightened 3 basis points on average in April due to better equity markets and lower new issue supply. Non-investment grade bonds returned +0.58% in April, with only one new issue of $125 million. Real Return Bonds underperformed, earning -0.86%, given their longer average durations. Preferred shares returned -0.42% in April.

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