FX.co ★ Canada 10-Year Bond Yield Eases from 1-Year Highs

The yield on Canada's 10-year government bond recently dipped below 3.5%, retreating from its one-year high of 3.611% recorded on July 15th. This decline aligns with a global bond market rally, which was prompted by renewed US-China tariff tensions and uncertainty about the Federal Reserve's future policy decisions. Such conditions heightened the appeal of safe-haven assets, consequently lowering Canadian yields. Domestically, earlier in July, yields were bolstered by persistently high core inflation near 3% and robust job creation. However, the softer headline CPI figure of 1.9% for June, alongside steady labor market conditions, have strengthened expectations that the Bank of Canada will maintain its current interest rates. Meanwhile, the latest Business Outlook Survey indicates that businesses are less worried about drastic US tariff measures and report relatively stable expectations for inflation and employment compared to the previous quarter.