Canada’s 10-year government bond yield slipped to around 3.65% in November, hovering near a two-month low, as markets digested weaker-than-expected labor data. National employment decreased by 4,700 positions in October. While this was an improvement on September’s loss of 68,300 jobs, it fell short of expectations for a 13,600 gain. Notably, private-sector employment declined by 53,000 (-0.4%), marking its first contraction since February.
Signs of a cooling labor market are strengthening expectations that the Bank of Canada could move toward interest rate cuts to support economic activity and job creation, which would, in turn, put downward pressure on yields for Canadian assets. Even so, Canada’s real GDP expanded by 0.8% in Q2 2026, following a modest 0.1% increase in Q1.
At the same time, recent losses in global equity markets have increased demand for safe-haven government bonds, further supporting Canadian sovereign debt prices. Political developments in the United States also weighed on risk sentiment: the Democrats secured majorities in both chambers of Congress in the midterm elections, heightening concerns about stricter regulation of AI-related infrastructure and triggering a broad sell-off in equities.
