FX.co ★ Canada 10-Year Bond Yield Halts Decline

Canada's 10-year government bond yield has risen to over 3.15%, reversing part of its recent sharp decline from an eleven-week high of 3.27% observed on April 11th. This movement comes as investors digest the latest domestic inflation figures in anticipation of the Bank of Canada's interest rate decision scheduled for Wednesday. The annual inflation rate dipped to 2.3% in March, down from 2.6% in February, falling short of both market predictions and the central bank's forecast of 2.5%. This decline suggests signs of inflation stabilizing after the cessation of GST and HST breaks had previously caused a 0.6 percentage point spike. Meanwhile, increasing U.S. trade tensions and heightened concerns about recession risks have dampened global market sentiment, consequently reducing demand for U.S. Treasuries. Additionally, President Trump's inconsistent messages regarding tariffs—offering potential exemptions for auto imports while considering new tariffs on semiconductors and pharmaceuticals—have generated uncertainty. This uncertainty has led investors to explore alternatives to U.S. assets, thereby exerting upward pressure on Canadian bond yields.