The third quarter of 2021 observed a few developments that will impact the outlook for interest rates over the next twelve months. First and foremost, both the Bank of Canada and the U.S. Federal Reserve have been purchasing corporate and government bonds in the open market. This activity is referred to as their “asset purchase programs” and helps keep interest rates low while stimulating the economy. Of the seven global central banks involved in this activity, the Bank of Canada was the first to announce a reduction of its program back in April of 2021. This reduction is referred to as “tapering”. Although the U.S. Federal Reserve had not yet begun tapering their asset purchases, they provided more clarity on this front during the third quarter. At their most recent central bank meeting, head of the U.S. Federal Reserve Jerome Powell indicated that they would begin tapering their program before year-end. He also indicated the program is likely to be complete by mid-2022. Why is this information critical? The tapering of central bank asset purchase programs is the first step in tightening financial conditions. Once the programs are complete, this paves the way for central banks to increase their overnight interest rates. With greater clarity on this front, it is now very possible that North American central banks may increase their overnight interest rates in the second half of 2022. How does this information impact our outlook? First off, we anticipate interest rates to continue grinding higher throughout 2022. Central banks will ensure their actions don’t cause rates to rise too quickly, however, this remains the path of least resistance. Secondly, if central banks will be purchasing fewer corporate bonds in the open market, credit spreads may see more activity next year. This may create some opportunity to purchase high-quality corporate bonds at more attractive yield levels. Based on our outlook over the next twelve months, we continue to position the fund defensively against rising interest rates, while maintaining a robust portfolio yield. Our objective is to protect investor capital, produce healthy income and avoid any unnecessary risk within the Fund’s portfolio.