Canada 10-Year Bond Yield Pulls Back

Canada's 10-year government bond yield eased to 3.52% from the six-week high of 3.59% touched on July 8th, as signs of lower energy inflation limited risks of a rate hike by the BoC. Crude prices declined on signs that diplomatic efforts between the US and Iran remain on track despite recent tensions. Even so, yields remained 12bps since the start of the month as the risk of renewed supply disruptions and higher energy prices persisted. On top of that, Canada's labor market continued to show resilience, with employment rising by 18,200 in June after an 88,000 increase in May and the unemployment rate unexpectedly tying its lowest level in nearly two years. Investors expect the central bank to leave its policy rate unchanged at its July 15th meeting.

Canada 10 Year Government Bond Yield increased to 3.55%, the highest since May 2026. Over the past 4 weeks, Canada 10Y Bond Yield lost 3.60 basis points, and in the last 12 months, it increased 5.50 basis points.

Canada's 10-year government bond yield held steady at 3.44% in July as lower oil prices and weaker-than-expected US jobs data reinforced expectations of a more accommodative monetary policy outlook. Oil prices remained near pre-conflict levels amid optimism over US-Iran peace efforts, easing concerns about energy-driven inflation and supporting expectations that the BoC will keep interest rates unchanged if disinflation continues. Meanwhile, North American bond yields came under pressure after weak US labor market data reduced expectations of a near-term Federal Reserve rate hike. Uncertainty surrounding negotiations to revise the USMCA also weighed on Canada's economic outlook, dampening prospects for future BoC tightening. At the same time, the Bank of Canada's preferred core inflation measures remained close to the 2% target in May despite higher energy prices, supporting the view that the inflationary effects of the Iran conflict are likely to be temporary.