RBC Plots Parallel Universe as Economists Hold On: Canada Credit

Royal Bank of Canada credit analysts are contemplating an alternative reality to the interest-rate estimates of the nation’s biggest bond underwriter with yields lingering below official forecasts.

The lower-for-longer scenario was presented in a May 23 note to clients side by side with the bank’s higher-rate view, detailing how lower yields would help pipeline developers and hurt bonds of banks, life insurers and phone companies with large pension plans. Ten-year bond yields would end the year at 2.5 percent, closer to where they are now, rather than the 3.05 percent sanctioned projection.