FX.co ★ Canada 10-Year Bond Yield Eases After Jobs Data

The yield on Canada's 10-year government bond remained just below 3.4%, slightly under the late December peak of 3.47%. This stabilization reflects expectations that interest rates are approaching their zenith due to indications of slower domestic growth and a weakening labor market. Recent economic data suggests a decline in momentum towards the year's end, with GDP showing weaker figures in October and November. Additionally, the unemployment rate increased to 6.8% in December as the supply of labor outstripped job creation, indicating more relaxed economic conditions. Wage growth has decelerated from its previous highs, labor force participation has increased, and employment growth has moderated. These factors diminish the upward risks to inflation, supporting the argument for the Bank of Canada to maintain its rates longer or consider easing them eventually. This sentiment has stabilized the longer end of the yield curve, with investors opting for extended durations as the likelihood of further rate hikes diminishes, leading to compressed term premiums. On the global stage, rates provided slight support as a softer US payrolls report maintained restraint on Treasury yields.