In bond markets, US bank earnings were met with an influx of bank bond issuances, on a backdrop of rising geopolitical risks and a Department of Justice (DOJ) criminal investigation into Federal Reserve Chairman Jerome Powell. This raised concerns of central bank monetary policy independence and pressure from the Trump administration to lower short-term interest rates. Meanwhile, in Canada, soaring metals prices boosted bond prices for a select, small, group of Canadian material and mining companies. Internationally, medium- to long-term maturity Japanese government bond (JGB) prices sharply declined (yields rose) on prospects for new inflationary pro-fiscal stimulus measures, following Prime Minister Sanae Takaichi's threat to dissolve parliament and call for a snap election. The 10-year Japanese government bond yield hit the highest level since 1999.

Bond markets largely disregarded the DOJ criminal investigation into Fed Chair Powell, leaving short-term US Treasury yields mostly unchanged. US rate cut forecasts were only slightly revised downward after Core CPI, a key inflation metric that excludes volatile food and energy prices, came in 0.1% below expectations. This was coupled with a surprise drop in unemployment benefits, indicating a robust labour market. This sustained labour market strength can reduce the urgency for the Federal Reserve to cut rates, and gives it more latitude to maintain focus on tackling inflation (still above the 2% target). That said, the accuracy of this CPI data is under scrutiny due to potential distortions from the protracted US government shutdown that began in October. Investors still predict roughly two 0.25% cuts by the Fed this year.

Following a week of mixed US bank earnings, JPMorgan Chase. initiated a flurry of debt issuance with a US$6 billion sale of investment-grade bank bonds, including a US$3 billion note maturing in 2037. Other financial institutions quickly followed, highlighted by Goldman Sachs's significant $16 billion debt deal—a record for a Wall Street bank. Demand for these new issues was high, resulting in tight credit spreads (risk premiums). Most newly issued investment-grade financial bonds are trading at a small 0.60% to 0.80% premium over similar-maturity US Treasury yields, providing banks with cheaper financing. These historically tight credit spreads are providing a less expensive source of capital compared to historic measures. Banks typically issue bonds after earnings for several key reasons, including leveraging strong market sentiment, refinancing existing debt when rates are favourable, and meeting capital or regulatory requirements.

Lastly, gains in the materials sector positively impacted related Canadian metal company bond prices for Glencore Finance Canada, Cameco and Russel Metals Inc. However, the Canadian materials sector constitutes less than 1% of the Bloomberg Canada Aggregate Corporate bond index, a much smaller portion compared to the dominant 43% weighting in financial issuers and 14% in utilities. This lower bond representation of the materials sector is largely due to the sector's high-risk, volatile nature, which is exposed to commodity prices and high capital expenditures, leading to less predictable cash flows.