FX.co ★ Canada 10-Year Yield Rises to 6-Month High

In July, the yield on Canada's 10-year government bond surpassed 3.45%, marking its highest point in nearly half a year. This gain coincided with diminishing fears of labor market deterioration, thereby bolstering the rationale for the Bank of Canada to maintain its interest rates. June saw an unexpected drop in the unemployment rate, the first improvement since January, spurred by the strongest increase in net employment this year. This development aligns somewhat with persistent underlying inflation, which remains above the target set by the Canadian central bank; the annual trimmed-mean core rate stood at 3%, nearing last month's one-year high of 3.1%. Meanwhile, the robust performance of benchmark equity indices in Canada and globally led foreign investors to sell off C$25 billion worth of Canadian bonds in April, with almost C$10 billion being government bonds.