FX.co ★ Canada 10-Year Bond Yield Falls

The yield on Canada's 10-year government bond retreated to 3.23% following a brief yet substantial uptick. This surge was initially triggered when the Bank of Japan’s hawkish signals caused Japanese Government Bond (JGB) yields to rise sharply, which led to a partial unwinding of yen-funded carry trades and momentarily lifted global benchmark yields, including Canada’s. This upward movement was further bolstered domestically by a surprising third-quarter GDP growth of 2.6% annualized, prompting market participants to reassess the Bank of Canada’s near-term easing trajectory and thus providing a temporary boost to Canadian sovereign rates. However, the momentum waned as U.S. data shifted dramatically, with an unexpected decline in ADP’s private payrolls increasing the likelihood of imminent Federal Reserve easing. Consequently, U.S. Treasury yields fell, dragging down Canada’s 10-year yield as well.