Q: Hello Peter and company,
With XLB hitting a new 52 week low, should I continue to take a long term view that yields will eventually be lower? I took a position in January and not sure weather to add, sell or hold. I have a 4% position with the reminder in the balanced portfolio and cash.
Thanks for the great service,
Angelo
With XLB hitting a new 52 week low, should I continue to take a long term view that yields will eventually be lower? I took a position in January and not sure weather to add, sell or hold. I have a 4% position with the reminder in the balanced portfolio and cash.
Thanks for the great service,
Angelo
5i Research Answer:
Long bonds have the most sensitivity to interest rates, and the rising back up in yields of course has not been good to XLB. But, it is a fact that the higher rates go the closer we will be to a 'peak'. The Canadian economy has started to slow. The Bank of Canada has paused its hike cycle for now. We continue to see rates peaking soon, and likely some (small) declines in rates in 2024. We would be fine holding XLB here, but would be cautious on adding more until the rate/inflation picture becomes a bit clearer.