FX.co ★ Canada 10Y Yields Ease as Peace Hopes Cool Stagflation Fears

The yield on the Canadian 10-year government bond slipped to 3.4% on Friday, nearing a one-month low, tracking a global decline in sovereign yields after the reopening of the Strait of Hormuz temporarily eased inflation worries. Iran’s foreign minister announced that the strait is now fully open to all commercial vessels for the duration of the 10-day ceasefire between Israel and Lebanon, triggering a nearly 10% drop in oil prices. The de-escalation has led global investors to increase their expectations of interest rate cuts by major central banks before year-end, with markets now assigning a higher probability to dovish policy shifts.