For a glimpse of the outlook for the Canadian bond market, look at how 2025 is starting. Prime Minister Justin Trudeau announced he would step down and that Parliament would be suspended until March 24, adding political uncertainty at a critical time. A shift to a more fiscally conservative government could ripple through the economy for years.
Jason Daw, head of North America rates strategy at RBC Capital Markets, asserts that the implications for the bond market are benign: “Anything on the political side would play out after the Bank of Canada has already completed the policy easing cycle this year.” He says a Conservative government promises more business-friendly policies to help mitigate Canada’s severe underperformance in business investment and productivity (both domestically and relative to the US), “setting the stage for improved investor sentiment.”
Even with the added political uncertainty, many analysts are…
