Canada 10Y Bond Yield Hits 4-week High

The yield on Canada’s 10 year government bond climbed past 3.45%, the highest in nearly a month, as a firmer US yield backdrop and tighter cross border duration pricing outweighed softer domestic fundamentals. US 10 year yields were testing their highest levels since August, supported by stronger US activity data and a reassessment of Federal Reserve policy following the nomination of Kevin Warsh, lifting the US risk free curve and increasing the opportunity cost of holding Canadian duration. Domestically, upside in Canadian yields remained constrained after real GDP was essentially flat in November and goods producing industries contracted 0.3%, marking the third decline in four months and reinforcing signs of excess capacity. That backdrop was echoed by the Bank of Canada’s decision on January 28 to hold the policy rate at 2.25% while stressing data dependence and lingering slack, limiting the case for a more restrictive stance and capping domestic yield pressure.

Canada 10 Year Government Bond Yield increased to 3.45%, the highest since January 2026. Over the past 4 weeks, Canada 10Y Bond Yield gained 2.30 basis points, and in the last 12 months, it increased 43.20 basis points.

The yield on Canada’s 10-year government bond has edged back toward 3.43% as markets weigh weaker domestic momentum against a firmer US yield backdrop and shifting expectations for US policy. Canadian data showing real GDP essentially flat in November, with a third contraction in four months across goods-producing industries led by manufacturing, has weakened the growth outlook and reduced the case for tighter policy. This view was reinforced by the Bank of Canada’s decision to keep rates unchanged while emphasizing data dependence and lingering excess supply in its forward guidance, signaling limited urgency to shift toward a more restrictive stance and capping domestic yield support. At the same time, stabilization in longer-dated yields reflects spillovers from higher global risk-free rates and cross-border duration pricing, which have offset the drag from softer growth and kept Canada’s long end from extending its earlier decline.