1Q26_ Quarterly Outlook Report_Final_EN - Flipbook - Page 137
T H E P LUMB LI N E | A RETU RN TO F I RS T PRI N CI PL ES
FIXED INCOME OVERVIEW
The bond market makes up a significant share of global debt
Total global debt
Global bond market
Top 3 largest bond markets
Fin.
corps,
34%
>$325
trillion
40%
~$145tn
~325%
of GDP
Size of global
bond market
>45%
18%
Gov't,
53%
Non-fin
corps,
14%
17%
1
Government debt and deficits are key drivers of bond yields
Debt-servicing costs may remain onerous
amid rising fiscal deficits
U.S.
Canada
U.K.
France
Government bond yields have increased
globally
5%
Budget deficit (% of GDP)
0%
4%
-2%
3%
2%
-4%
1%
-6%
0%
-8%
U.S. 10-yr
Current
Pre-pandemic
Canada 10-yr
Current
U.K. 10-yr
France 10-yr
Pre-pandemic level
Trade policy uncertainty could slow the pace of monetary policy easing
The Fed remains relatively more
2
cautious than other central banks
IG issuers are 4x less likely to default
than HY issuers
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Sources: SIFMA 2025 Capital Markets Fact Book, Bloomberg Finance LP, Scotia Wealth Management | 1 – Pre-pandemic period references level at the end of 2019. | 2 – 1-yr fwd rate based on
Scotiabank Economics’ Dec11/2025 forecasts. U.S. Fed funds rate is the upper bound of the target range. Eurozone rate is the deposit rate. | 3 – YTM = yield to maturity. Yields as at December 2025
