The yield on Canada’s 10‑year government bond fell toward 3.45%, extending its decline from recent highs as mounting growth fears and a flight to safety outweighed the inflationary impact of surging energy prices. The move closely tracked the drop in US Treasury yields, with investors seeking shelter in sovereign debt amid acute uncertainty over the economic fallout from the five‑week conflict in the Persian Gulf.
Although a flash estimate showed that GDP grew 0.2% in February, the broader outlook remains uncertain, clouded by a rising unemployment rate and the risk of a global recession if the current supply shock endures. Despite the sharp increase in crude oil prices, Federal Reserve Chair Powell indicated that inflation expectations remain well anchored, reducing the immediate pressure for interest rate hikes as central banks evaluate the consequences of the Iran war.
The 10‑year yield had risen markedly in March before this latest pullback, as market focus shifted from inflation worries to concerns over economic growth.
