Summary

• US inflation above target means a bigger challenge for the Fed than the BoC, from an energy shock.
• APAC economies worse hit but global stagflation risks increase on energy shock.
• The US switch to a net energy exporter helped the USD recover safe-haven status in Q1.
• Yield levels, credit quality & large HY energy weighting restricted Q1 credit losses.

By Robin Marshall, M.A., MPhil, Director, Global Investment Research | Belle Chang, MBA, Senior Manager, Global Investment Research

More benign macro setting for 2026 energy shock

Short Treasuries and Canadian govt bond markets discount modest