In Europe, the European Central Bank’s quantitative easing programme will commence in March. As we outlined last month, we have doubts about the prospects for the programme’s success. Stronger growth will more likely be the result of reduced austerity by European governments and pent-up demand. Greek debt negotiations are expected to produce headlines, if not results, for the next four months.

We shifted portfolio durations close to benchmark levels, because of the Bank of Canada’s surprise policy change as well as the market volatility. We are monitoring the market for when economic fundamentals matter more, and will look to reduce durations when that occurs. The provincial sector remains attractive even with the spread narrowing that occurred in February. We are continuing to monitor the corporate sector both for opportunities to take profits and to add attractively priced issues, as we believe that valuations and credit worthiness of individual issuers will be subject to considerable variation.

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