Canadian investment portfolios are just along for the ride at this point – the major market drivers of recent weeks have little or nothing to do with anything happening within our borders.U.S. Federal Reserve policy and bond yields are the best example of this. The Fed raised rates with the belief that the U.S. economy is strengthening, and five-year bond yields have climbed to 2.1 per cent, from 1.2 per cent, since Nov. 4. Despite the fact that the domestic economy remains sluggish, government of Canada yields have been dragged higher by U.S. policy. Five-year Canada bonds now yield 1.2 per cent, 57 basis points above the November lows.
Higher domestic bond yields, whether justified or not, have hit income-related equity sectors. Domestic telecom and utility stocks are lower by an average of two per cent. Higher U.S. rates have pushed the greenback higher – it’s at 14-year highs – and this …