e Bonds overview Government bonds - Key points preferences (6 eens long duration ¢ We expected government bond yields to move towards slightly higher ranges over the next 6 months, as seen in late 201 1/early 2012. This is likely to have a slightly negative effect on most developed usD government bond prices, and is likely to result in a total return around zero over this period. e Price fluctuations in the month ahead could originate from developments in the Eurozone and the US. FUR (DE) They include the Troika report on Greece, Spanish local elections/referendum and the possible delayed GBP request for additional ECB support in Europe. In the US, the extent of the fiscal cliff is dependent on the election outcome and the results from the debates in the subsequent lame duck session of congress. PY While we expect the full cliff to be avoided, it poses a significant downside risk to domestic growth. * Overall, we suggest keeping the duration close to neutral, as we expect global growth to remain CHF lackluster and central banks to continue supporting bond markets. CAD Corporate and emerging market bonds - Key points mus. ¢ We maintain a preference for investment-grade (IG) and US high-yield (HY) corporate credit. A strong (US) corporate sector, the ongoing moderate recovery of the US economy, determined central bank mnew old support and a strong technical backdrop are likely to further support credit segments. ¢ Investment-grade corporate bonds have achieved a total return of more than 10% so far this year, at SCG GEHNE) _ EEL remarkably low volatility. While absolute returns will likely be moderate in the next six months (1-2%), the asset class should continue outperforming government bonds, offering higher liquidity than HY Bonds total bonds. We see the highest return potential in the lower-rated IG segments (BBB and A). e US corporate bonds of lower credit quality (HY) remain fundamentally supported by solid balance Government sheets and a benign US growth outl