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Commentary
Canso 2005 Q1 Corporate Bond Newsletter

The financial markets were not friendly to investors in the first quarter of 2005. The U.S. Federal Reserve continued to increase short term interest rates in the United States and energy prices continued to stoke inflation worries. Although the Canadian commodity-weighted S&P TSX Stock Index rose 4%, most world stock markets were negative. Bonds were negative in the important U.S. market with Merrill Lynch Bond Market Index down .6%. Risk was not popular in the U.S credit markets. Corporate bonds were down .9%, on widening yield spreads, and the U.S. high yield market was off 1.4% for its first reversal in some time. In Canada, a mediocre quarter in the bond market was saved by a convenient rally in long bond prices on March 31st! This put Canadian long bonds up 2% and the return of the RBC-CM Bond Market Index at 1.1% compared to the negative returns in the U.S.

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Canso 2005 Q1 Corporate Bond Newsletter