09:29 AM EDT, 05/05/2025 (MT Newswires) -- Market volatility continued over the past month, but sentiment improved in the latter stages of April with some easing in United States tariff threats and a rebound in equities, said Bank of Montreal (BMO).

Long provincial bond spreads in Canada have tightened somewhat since the early-April high, but remain about 12bps wider than at the start of the year, wrote the bank in its "Provincial Credit Watch" note of May.

The clear tariff-induced deterioration in risk appetite has weighed, and provincial borrowing programs remain "chunky," stated BMO. That said, long provincials still

outperformed Government of Canada (GoC) bonds on a total return basis in the latest month, and continue to do so over the past year, pointed out the ban.

Long spreads tightened for most provinces in recent weeks, leaving levels little change from the start of April, it added.

Budgets from Prince Edward Island and Newfoundland & Labrador leave nine of 10 complete, with Ontario on May 15 the last province due to table its 2025 document among Canadian provinces.

While risk appetite improved in recent weeks, oil prices also fell notably, with WTI currently trading around $57.50/barrel.

That has weighed somewhat on spreads in Alberta, Saskatchewan and Newfoundland & Labrador. Alberta, for example, assumed $68/barrel for WTI in its 2025 budget, and a $10 miss would -- all else equal -- impact revenues by roughly $7 billion, according to BMO.