The primary drivers of fixed income returns this past quarter were changes in yields, the shift in the shape of the yield curve and movements in corporate bond spreads. Frequent readers of this quarterly update will recognize these as familiar topics and themes from our prior comments.

Beginning with domestic bond yields and the shape of the curve, looking at Figure 1, below, during Q3 the Canadian yield curve steepened modestly. The terms from 1 month up to 10 years all shifted lower by approximately 10 bps, while the 20 and 30 year bond yields were flat or up a handful of basis points.