Canadian 10-Year Yield Holds Near Two-Month Low

Canada’s 10-year government bond yield edged lower to around 3.65% in November, near its lowest level in two months, as markets are assessing weak employment data. Canadian employment fell by 4,700 in October, improving from September’s 68,300 decline but missing forecasts for a 13,600 increase. Private-sector employment dropped by 53,000 (-0.4%), its first decline since February. A softer labor market could prompt the BoC to cut rates to support economic activity and hiring, lowering yields on Canadian assets. However, Canada’s GDP grew 0.8% in Q2 2026, following a 0.1% expansion in Q1. Meanwhile, recent global equity losses boosted demand for safe-haven government bonds. The Democrats won majorities in both chambers of the US Congress in the midterm elections, fueling concerns over tighter AI infrastructure regulations, prompting a rout in equities.

Canada’s 10-year government bond yield hovered around 3.68% in November, remaining near its lowest level in two months, as mounting global equity losses boosted demand for safe-haven government bonds. Democrats won majorities in both chambers of the US Congress in the midterm elections, fueling concerns over tighter AI infrastructure regulations. Markets are also cautious ahead of employment reports from Canada and the US. Canadian employment is expected to rise by 13.6 thousand in October, following a 68.3 thousand decline in September, the steepest drop in seven months and well below expectations for a 7 thousand increase. The data may offer clues on the BoC’s policy outlook. At its latest meeting, the BoC raised rates by 25 bps to 2.5%, its first hike since 2023, as expected. Policymakers also raised their inflation and growth forecasts. Annual inflation reached 3.1% in September, its highest since May’s 3.2%, but below the 3.2% forecast.

Canada's 10-year government bond yield edged lower to around 3.68%, its lowest level in more than two months, tracking a broader decline in global bond yields. The move came amid a broader risk-off sentiment, triggering a renewed global sell-off in technology stocks as investors weighed the potential impact of a Democratic victory in the US on the technology sector and AI-related capital expenditure. Also, the Democrats' gains could strengthen their position in challenging President Trump's trade policies, potentially affecting Canada. Meantime, the BoC delivered its first interest rate hike in more than three years in October, as expected. The BoC signalled that further increases may be necessary to prevent rising energy costs from spilling over into broader inflation. It also raised its 2027 inflation forecast to 3.1%, from 2.0% in July, while upgrading its growth outlook to 1.0%, from 0.7%. Despite the latest rate increase, the policy rate remains below the estimated neutral level.