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Hank Cunningham.JENNIFER ROBERTS/The Globe and Mail

Hank Cunningham is fixed income strategist at Odlum Brown.

Top Picks:

One-to-ten year Corporate Bond Ladder:

iShares 1-10 Year Laddered Corporate Bond Index ETF (CBH-TSX)

Odlum Brown has maintained a 1-10 year corporate ladder (along with a Government and Zero coupon ladder) for the past five years. It consists of 10 investment grade corporates and had a yield of 2.7 per cent at the end of January. It returned 5.1 per cent in 2014. For those investors who are unable to access individual bonds, I recommend the iShares 1-10 year Corporate Ladder, CBH, which yielded 1.8 per cent at the end of January. It contains 64 separate bonds. It returned 5.77 per cent in 2014.

Brookfield Office Properties 4% April 16, 2018 at $105.88 2.07%

iShares U.S. High Yield Bond Index ETF (CAD-Hedged ETFs) (XHY-TSX)

Past Picks: January 29, 2014

Brookfield Asset Management 5.29% April 25, 2017

Then: $108.70; Now: $107.58; Total return 3.90%

Shoppers Drug Mart 2.36% May 24, 2018

Then: $99.92; Now: $102.66; Total return 4.98%

Bell 3.35% June 18, 2019

Then: $102.43; Now: $106.29; Total return 6.80%

Total return average: +5.23%

















Market outlook:

The U.S. released another impressive employment report for January, with large upward revisions to the previous two months. Importantly, hourly earnings rose by a healthy 0.5 per cent. Recent rhetoric by the Fed indicates that it is being "patient" with its monetary policy. The latest economic releases support the Fed's view that the drop in reported inflation will prove to be temporary. The Fed is setting the stage for its first hike in the Fed Funds Rate later this year. There have been a few green shoots appearing in global economies which would also make it an easier decision for the Fed.

The Canadian dollar was blindsided not only by plunging petroleum prices but also by the shocking cut in the Bank Rate by the Bank of Canada. After touching a low of US$0.7854, it has moved back over $0.80 as energy prices have bottomed, at least for now. Overall, it seems likely for the ten-year U.S. Treasury note to move back over 2 per cent in the near term with other market yields following.