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The nascent recovery in “risk” assets that began in mid-February continued through March. The price of oil, which had been close to $26 on February 11th, climbed to over $41 per barrel by mid-March before consolidating to $38 at the end of the month. The S&P/TSX gained 5.3% in March, while the S&P 500 rose 6.8%. In the bond market, investors’ increased risk tolerance was reflected in a sharp narrowing of yield spreads for corporate bonds and somewhat narrower spreads for provincial issues, too. The safe haven bid for federal government bonds faded, resulting in modestly higher yields for Canada Bonds. However, additional monetary stimulus announced in Europe and Japan in the form of more deeply negative interest rates and increased quantitative easing put downward pressure on North American government bond yields, thereby keeping them from rising very much. Overall, strong returns in corporate and provincial bonds more than offset weak results in federal issues, with the broad market enjoying good results for March. The FTSE TMX Canada Universe Bond index returned 0.78% in the month. (more…)