1. Mark Vallee, MFin, CFA, CMT Senior Portfolio Manager November 2016
FIXED INCOME OUTLOOK
Mark Vallee, MFin, CFA, CMT
Senior Portfolio Manager
November 2016

2. FIXED INCOME ENVIRONMENT U.S. Bond Yields Rebound From Historical Low
Source: Bloomberg (Jan – Nov )

3. FIXED INCOME ENVIRONMENT Trump’s Pro-growth Policy is Inflationary
Major Policy
Ramification
Tax Cut
Reduce Gov’t Revenue
Increase Infrastructure Spending
Larger Budget Deficit
Trade/Establish Prohibitive Tariff
Pro-manufacturing & Increase Price Pressure
Crack Down on Illegal Immigration
Tighter Labour Force / Wage Inflation
Pro Energy
Coal, Oil & Gas, and Pipelines

4. FIXED INCOME ENVIRONMENT Shifting Away From Negative Yield
Japanese Yield Curve
Nov
Jun
Nov
German Yield Curve
Jun
Source: Bloomberg (Jun 30, 2016 – Nov 14, 2016)

5. FIXED INCOME ENVIRONMENT Canadian Bond Yields Remain Low
Source: Bloomberg (Jan – Nov )

6. FIXED INCOME ENVIRONMENT Value in Canadian Credit Sector
Source: Bloomberg (Jan – Nov )

7. FIXED INCOME POSITIONING Short Duration with Overweight in Corps
Empire Bond Fund FTSE TMX Canada Universe Index
Yield % %
Mod. Duration Yrs Yrs
Sector Exposure (%) Quality Exposure
Source: Empire Life, FTSE TMX Global Debt Capital Markets Bond Index as of Oct.31, 2016

8. FIXED INCOME SUMMARY Outlook & Positioning
U.S. economic fundamentals and Trump policy effects have altered U.S. interest rate outlook
Global central banks are shifting away from negative rate policy
Canadian yields are likely to continue to stay relatively low
Portfolio Positioning
Short to neutral duration
Overweight credit
US dollar exposure

9. Important Notes
Past performance is no guarantee of future performance. This presentation reflects the views of Empire Life as of the dated presented. The information in this presentation is for general information purposes only and is not to be construed as providing legal, tax, financial or professional advice. The Empire Life Insurance Company assumes no responsibility for any reliance made on or misuse or omissions of the information contained in this presentation. Please seek professional advice before making any decision. A description of the key features of the individual variable insurance contract is contained in the Information Folder for the product being considered. Any amount that is allocated to a Segregated Fund is invested at the risk of the contract owner and may increase or decrease in value. ®/TM Registered trademark and trademark of The Empire Life Insurance Company. Policies are issued by The Empire Life Insurance Company.