FX.co ★ Canada 10-Year Bond Yield Falls to 6-Month Low

The yield on the 10-year Canadian government bond has edged closer to 3.07%, approaching its lowest levels in six months. This decline reflects market anticipation of potential monetary easing in both Canada and the United States. In Canada, there's an almost certain expectation of a 25 basis point cut by the Bank of Canada. Additionally, the sudden halt in trade discussions by Washington heightens the possibility of tariffs and reduced exports. These developments suggest that the friction from tariffs and sector-specific issues could constrain business investment and export revenues, thereby dampening economic growth. Such conditions may prompt the Bank of Canada to consider further easing measures to counteract these effects. Markets are now strongly predicting a 25 basis point reduction at the meeting on October 29th, following a period of subdued domestic economic activity and weaker survey results. In the United States, a lower-than-anticipated inflation report has solidified market expectations for another interest rate cut by the Federal Reserve this year, resulting in a decrease in Treasury yields.