FX.co ★ Canada 10-Year Bond Yield Near 2-Week Low

Canadian 10-year bond yields have dipped below 3.12%, reaching their lowest point in nearly two weeks. This decline is largely attributed to weaker economic data from both Canada and the U.S., prompting investors to anticipate further monetary easing by central banks in North America. Canada's economy unexpectedly contracted by 0.2% in February, primarily due to a 2.5% decrease in oil and gas production and a 0.5% reduction in construction activity. The anticipated modest recovery of just 0.1% for March underscores the vulnerability of economic growth. With the Bank of Canada keeping its policy interest rate steady at 2.75%, market participants have postponed expectations for additional tightening and are beginning to factor in possible rate cuts should U.S. tariff threats push the economy towards a recession. Simultaneously, Prime Minister Carney’s slender minority mandate, although it upholds his credibility with the central bank, introduces further uncertainty to the fiscal outlook. In the United States, a reduction in Treasury yields—triggered by new indications of economic slowdown and weakening labor market trends—has also contributed to the downward pressure on Canadian rates.