FX.co ★ Canada 10-Year Bond Yield Rises to 5-Month High

The yield on Canada's 10-year government bond has risen to approximately 3.4%, marking a five-month high. This increase is driven by heightened expectations of a more aggressive stance from the Bank of Canada and ongoing geopolitical tensions. Domestically, core inflation rates persistently remain above the central bank's 2% target. Furthermore, an unexpected 1.2% rise in April's retail sales has bolstered the belief that the Bank's policies will continue to be restrictive, leading investors to seek higher term premiums. Meanwhile, Ottawa's substantial long-term financing requirements have surged, increasing benchmark issuance as traditional buyers, like pension funds, shift towards more attractive yields abroad. Globally, a general rise in interest rates, driven by robust US economic data, renewed trade disputes, and continued geopolitical uncertainties, has influenced Canadian yields, keeping borrowing costs near multi-month high points.