Q: Why is the price of XBB going down now, since interest rates have come down?
5i Research Answer:
XBB has increased by 3.5% since the Bank of Canada first cut rates in June of this year. On a weekly basis, the price of XBB can fluctuate and it has had some negative weeks since the BoC started cutting rates. This is due to bond market pricing. Bond prices and bond yields fluctuate based on expectations for future cuts, and so any weekly datapoint such as GDP growth, inflation, employment, etc. can impact bond traders' expectations for the future path of interest rates, directly impacting the price of bonds today.