FX.co ★ Canada 10-Year Bond Yield Above 3.2%

Canadian 10-year bond yields have stayed above 3.2%, nearing the eleven-week high of 3.27% recorded on April 1st, as the market weighs the Bank of Canada's cautious stance, ongoing domestic inflation, and rising global borrowing costs. While the headline Consumer Price Index (CPI) eased to 2.3% in March, core inflation—primarily driven by the services and housing sectors—remains persistently above 3%. This has led investors to believe that the Bank of Canada will proceed with caution, likely opting for only minor reductions in its policy rate later in the year. Compounding these pressures, U.S. threats of imposing tariffs on semiconductors and automobiles have raised recession concerns and dampened foreign interest in Canadian debt, despite strong oil export revenue bolstering the country's external accounts. Furthermore, Ottawa's recent decision to increase long-term bond issuance to finance infrastructure and social initiatives has added to the supply, exerting additional upward pressure on yields.