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July 18, 2019 | Canadian Government Bonds Rising as Growth Stalls

Danielle Park

Portfolio Manager and President of Venable Park Investment Counsel (www.venablepark.com) Ms Park is a financial analyst, attorney, finance author and regular guest on North American media. She is also the author of the best-selling myth-busting book "Juggling Dynamite: An insider's wisdom on money management, markets and wealth that lasts," and a popular daily financial blog: www.jugglingdynamite.com

The government bonds in our portfolios have appreciated for many months now as economic data disappoints and central bank rate cuts come to fruition once more.

Although the Bank of Canada (BOC) is presently on hold, rate cuts by the US Fed will force the BOC to follow suit.  The rally in government bonds is likely to continue as Canada’s ten-year treasury yield (shown below) falls from 1.54% today towards 1% in the months ahead.

On a risk-adjusted basis, now very late in this credit cycle, North American treasuries are a far more prudent allocation than stock markets near cycle highs.  But since government bonds and funds pay relatively little in commissions and fees to financial advisors and product sales firms, most portfolios hold little to none of them.  Sad fact.

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July 18th, 2019

Posted In: Juggling Dynamite

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