In bond markets, prices fell and yields pushed higher around the world as inflationary concerns over rapidly rising oil prices gripped fixed-income investors. While important central bank decisions were announced in a variety of countries globally, investors were eagerly anticipating commentary from central bank governors. Private credit delinquencies and redemptions continue to make news headlines while provincial credit downgrades unfold in Western Canada.

The Bank of Canada (BoC) and the US Federal Reserve (Fed) both held rates steady, as expected, amidst mounting energy inflation pressures from the Middle East conflict. Following the BoC decision, Canadian government yields rose across the curve on inflationary uncertainty, after Governor Tiff Macklem issued a cautionary note that it was "too early to assess the full impact" of a protracted Iran war, despite an assessment that risks may be subdued by economic slack and excess supply from the US trade dispute. US Treasury yields also moved higher (two year rate rose 0.10% on the day) following the Fed's decision to leave rates unchanged, and the release of  higher-than-expected US Producer Price Index (PPI) data. Fed Chair Jerome Powell emphasized that inflation progress was needed to lower rates— maintaining a wait and see stance—while tackling the Fed’s dual mandate of price stability and maximum employment. This cautious tone was echoed by the European Central Bank which may consider raising rates if inflationary pressure continues to build from the war in Iran.  

In private credit markets, notable asset managers are providing their views on the trend of private credit funds, such as Blue Owl, New Mountain, and offloading loans at a discount to meet outsized investor redemption requests, particularly those loan portfolios exposed to AI-disrupted software. PIMCO President Christian Stracke conveyed the asset manager is staying away from these discount loan sales, and would need to see “high-teens” returns—particularly on the more distressed software direct lending side before participating. Stracke also highlighted that private credit markets are not currently in crisis, and that there is an inherent cyclicality with private credit markets. Both Morgan Stanley and UBS Securities issued reports indicating private credit default rates could exceed 8% as AI-related advances disrupt the industry.

US investment grade corporate bond investors are demanding a slightly higher credit risk premium amidst the Middle East war, with the spread moving from 0.84% to a weekly peak of 0.93%, based on the Bloomberg US Corporate option adjusted spread (OAS) index data. The corporate OAS measures the average difference between investment grade corporate bonds and the risk-free rate measured by government bonds. Despite the recent spike in spreads due to the war in Iran, these spreads are still relatively low compared to the five-year average of 1.03%. For example, over the last year, the highest premium was around 1.19% amidst the market volatility from the US tariff “liberation day.” 

Bloomberg data showed that despite geopolitical tensions hampering new US bond issuances over the past few weeks, March 2026 bond sales are still the third largest on record based on historical March volume. The second largest was USD$230 billion (2022). That said, the Novartis AG deal helped to boost new bond volume, raising USD$11 billion in a seven-part debt deal. Novartis bond maturities ranged from three to 30 years, with the longest-dated 2056 maturity note priced to yield 0.9% above the closest US treasury benchmark. 

In local provincial news, the credit rating agency Moody's downgraded the province of British Columbia's credit rating to Aa2 and maintained a negative outlook. The agency cited a deterioration in the province's credit fundamentals and a widening budget deficit, set against a backdrop of heightened US trade uncertainty. Such downgrades typically put upward pressure on the cost of borrowing for provinces when they issue future bonds. 

Lastly, Canadian-based entertainment company, Cineplex, announced an extension of its credit arrangement which extends the maturity date from March 2027 to either September 2028 or March 2029, providing additional flexibility in the company’s financing and a replacement of certain benchmark loan rates. In the face of declining box office numbers, Cineplex is looking to stabilize its capital structure as credit ratings agency Fitch improves its rating to “stable” from “negative.”