Canada 10Y Bond Yield Hits 20-month High

The Canadian 10-year government bond yield retreated below 5.2% as global markets reacted to a potential de-escalation in the Middle East following Donald Trump's order to pause strikes on Iranian energy infrastructure. This shift represents a transition from peak stagflation fears toward a fragile relief rally as WTI crude plummeted in response to the five-day cooling-off period. Investors are now recalibrating expectations for the Bank of Canada and the Federal Reserve as major central banks signal a readiness to tighten policy further if price pressures persist.

Canada 10 Year Government Bond Yield increased to 3.64%, the highest since July 2024. Over the past 4 weeks, Canada 10Y Bond Yield gained 44.60 basis points, and in the last 12 months, it increased 64.35 basis points.

The yield on Canada’s 10-year government bond climbed past 3.48% amid persistent global inflationary pressures and a hawkish shift in North American interest rate expectations. While headline inflation in Canada decelerated more than anticipated to 1.8% in February and the unemployment rate rose to 6.7% following a loss of 83,900 jobs, the Bank of Canada maintained its overnight rate at 2.25% on March 18th and warned of heightened uncertainty. At the same time, the US February PPI and a more aggressive stance from the Federal Reserve, drove 10-year Treasury notes to August 2025 highs amid escalating conflict in the Middle East. Although markets previously prioritized a widening output gap and cooling food costs, the ongoing risk of energy supply disruptions across the Strait of Hormuz has maintained volatility in benchmark rates. The 10-year benchmark is now following a broader rise in global yields as investors brace for one rate cut at most this year from major central banks.