Last week in bond markets, weaker Canadian employment reports triggered a rally in Canadian government bonds, pushing yields lower across the curve as investors dampened conviction for Bank of Canada (BoC) rate hikes in 2026. The 2 year Canadian government yield moved 8 basis points lower to close the week off at 2.86%. In contrast, US payroll data came in stronger than anticipated, exhibiting formidable employment growth, while wage growth came in below expectations. The resilient US labor market performance amidst the Iran war, combined with subdued wage inflation, reinforced expectations that the Federal Reserve will maintain its wait-and-see approach and keep rates on hold for the remainder of 2026, based on swap market and futures pricing.

Following Magnificent Seven earnings and Meta's oversubscribed US$25 billion bond deal from the prior week.Alphabet raised approximately US$17 billion equivalent, encompassing a €9 billion euro-denominated sale and their first-ever $8.5 billion of Canadian-denominated bonds— diversifying outside US-denominated funding sources after raising full-year 2026 capital expenditure guidance (with AI infrastructure being a key spending driver). Separately, pharmaceutical company Eli Lilly raised US$9 billion in investment-grade bonds to fund its portfolio expansion of biotechnology acquisitions, in addition to general corporate purposes.

Alphabet’s 9 billion euro-denominated deal was offered in six parts, with maturities ranging from 4 to 37 years, and was at a high-grade S&P AA+ rating. The longest-maturity bond was priced to yield around 4.84%. While the euro-denominated deal saw strong book demand and highlighted investors' continued strong appetite for hyperscaler debt and AI infrastructure initiatives, and the yield was still at a slight premium to their November 2025 euro issuances. This may reflect investors requiring higher compensation for absorbing large volumes of hyperscaler debt to fund AI initiatives, alongside broader macroeconomic factors such as rising yields stemming from energy price inflation due to the war in Iran. Additionally, Alphabet’s historic $8.5 billion first-ever Canadian-denominated bond offer was in four parts, with maturities ranging from 5 to 30 years, rated AA+(S&P). The longest-dated bond was priced to yield 5.06%. 

In a move toward greater transparency, Apollo Global Management announced plans to offer investors daily valuation for its private credit funds, departing from the industry’s standard quarterly practice. The shift, which may prompt competitors to follow suit, is intended to provide greater transparency in fund pricing for investors of private assets, particularly new investors. Apollo believes this decision may lead to significant growth for the asset class. This decision comes amidst persistent private credit industry concerns regarding lending standards, valuation transparency, software loan exposure, and rising fund redemption requests. Apollo is targeting the end of June 2026 for daily valuation of investment-grade loans, with daily pricing for direct lending to follow by September 2026. In contrast, leading global asset manager BlackRock cut the value of its publicly traded private credit fund by roughly 5% due to troubled loans and lower returns. In response, BlackRock made efforts to improve credit quality by investing in more senior debt and strengthening its balance sheet.