11:55 AM EDT, 08/05/2026 (MT Newswires) -- Canadian long provincial bond returns weakened over the past month as higher long-term Government of Canada (GoC) bond yields and modest spread widening weighed on performance, according to BMO Capital Markets in a Wednesday note.

GoC yields rose across maturities, with 30-year yields backing up 27 basis points in July, partly reflecting a similar move higher in US Treasury yields, wrote BMO in the August edition of its "Provincial Credit Watch" note.

Long provincial spreads widened modestly during the month as geopolitical uncertainty and softer equity markets weighed on investor risk appetite, although both factors have improved heading into August, said the bank.

Year to date, long provincials have continued to outperform GoCs by just under three percentage points, generating a total return of 1.9%.

Ontario's provincial bonds continue to trade at the tightest provincial spreads, supported by its deep, liquid issuance base and a recent history of favorable fiscal surprises, added BMO. Saskatchewan and Alberta spreads remain broadly in line with, or only modestly wider than, Ontario, near the lower end of their three-year ranges, lifted by elevated oil prices that could provide further support to fiscal performance.

By comparison, British Columbia and Quebec remain among the wider-spread provinces relative to Ontario, with valuations reflecting fiscal pressures and, for Quebec, continued political uncertainty.