FX.co ★ Canada 10-Year Bond Yield Eases

The yield on Canada's 10-year government bond has decreased to approximately 3.2%. This marks a pause in its rebound from the four-month low of 3.158% observed on September 16th. The easing can be attributed to weaker long-term yields in the US combined with stronger domestic activity, which lessened the near-term premium investors were demanding. According to an advance estimate from Statistics Canada, real GDP was essentially unchanged in August. Gains in wholesale and retail sectors offset declines in mining, manufacturing, and transportation, reducing the growth concerns that had previously pushed long yields up. Meanwhile, the US Personal Consumption Expenditures (PCE) inflation for August saw only modest monthly increases in both headline and core readings. This did not lead to a significant re-pricing of Federal Reserve policy and helped to narrow international interest rate differentials. The softer US long yields in turn eased cross-border pressure on Canada's long-term rates, mitigating some upward pressure from global real rates.