Canada 10Y Bond Yield Hits 12-week Low

Canada’s 10-year government bond yield fell to a fresh three-month low of 3.16%, as an unexpected economic slump fueled expectations for a more accommodative monetary stance. While markets originally anticipated a flat reading, Statistics Canada reported that the economy shrank by 0.6% in the final quarter of 2025, marking the weakest annual performance in nearly a decade. This contraction was largely triggered by a massive $23.5 billion inventory drawdown and a sharp drop in exports. The resulting downward pressure on yields has been amplified by a global bond rally amid shifting trade policies. Although the US implemented a 10% global surcharge under Section 122, the exemptions for trade-compliant Canadian goods have helped stabilize the local debt market compared to other international peers. With inflation already slowing to 2.3%, the combination of negative growth and secured trade status has reinforced the Bank of Canada's decision to keep its policy rate at 2.25%.

Canada 10 Year Government Bond Yield decreased to 3.17%, the lowest since December 2025. Over the past 4 weeks, Canada 10Y Bond Yield lost 24.80 basis points, and in the last 12 months, it increased 21.05 basis points.

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.