Canada 10-Year Bond Yield Hits 12-Week Low

Canada's 10-year government bond yield fell below 3.2%, marking a 12-week low as investors weighed a volatile US trade landscape against signs of cooling domestic price pressures. The market was caught between the US Supreme Court's rejection of broad tariff powers and President Trump's subsequent pivot to a 15% global surcharge under Section 122. This North American bond rally follows a drop of the US 10-year Treasury yield as traders adjust to the administration's weekend escalation of levy rates. Supportive domestic data has reinforced the decline, with January inflation slowing to 2.3% and the Bank of Canada maintaining its 2.25% policy rate to flatten the long-term yield curve. Persistent trade headwinds are also reflected in Canada's record $31.3 billion annual trade deficit, though recent gains in gold and crude oil prices near $66 have helped mitigate the impact on broader sovereign debt demand.

Canada’s 10-year government bond yield fell toward 3.22% on Friday, marking a 12-week low as investors reacted to a landmark US Supreme Court ruling and cooling inflation data. The court’s decision to strike down President Trump’s global tariffs removed an inflationary tailwind and reduced the risk of trade-driven supply shocks, prompting a rally in North American sovereign debt. This impulse complemented a soft domestic backdrop after January CPI slowed to 2.3% and the Bank of Canada’s trimmed mean eased to 2.4%, showing price pressures are moderating. With the policy rate at 2.25% and officials signaling settings are appropriate, markets have flattened the expected rate path and lowered the term premium. Additional pressure came as oil prices pared weekly gains despite a 9 million barrel drop in US inventories. The decline reflects growing confidence in a stable inflation outlook as global trade uncertainty recedes following the legal setback for the White House.

Canada’s 10 year government bond yield slid toward 3.22%, its lowest level in eleven weeks, as moderating inflation and softer external drivers eased long term borrowing costs. Canada’s January CPI eased to 2.3% and the Bank of Canada’s trimmed mean slowed to 2.4%, reinforcing evidence that underlying price pressures are cooling and reducing the probability of renewed tightening. With the policy rate held at 2.25% and officials signaling that settings are broadly appropriate, markets have flattened the expected rate path, lowering the term premium embedded in 10 year yields. At the same time, renewed prospects of oil supply increases from April have tempered energy price expectations, softening the inflation and terms of trade channels. Meanwhile, US Treasury yields traded near early-December lows after a similar soft inflation picture added to dovish bets for the Federal Reserve, compounding pressure on North American yields.