Canada Bond Yield Tops 3.8% on BoC Hike Bets

Canada’s 10-year government bond yield rose above 3.8% from a two-month low of 3.65% reached on November 9th, as markets increasingly price in an interest rate hike by the BoC before year-end. Annual inflation rose to 3.1% in September from 3.0% in August, its highest since May’s 3.2%. Rising prices follow a recovering economy, with Q2 GDP growth at 0.8%, while the Democratic Party’s victory in the US midterms could soften trade pressures on Canadian growth. However, tempering hawkish certainty, employment fell by 4,700 in October, missing expectations for a 13,600 increase. Meanwhile, US Treasury yields held at three-week highs amid growing expectations for faster Federal Reserve policy tightening, following hotter-than-expected US consumer inflation data and hawkish remarks from Fed officials, adding to hawkish pressures in Canada.

Canada’s 10-year government bond yield edged higher to around 3.7% from a two-month low of 3.65% reached on November 9th, tracking the increase in its US counterpart. US Treasury yields climbed after hotter-than-expected inflation data in October reinforced expectations of further Federal Reserve rate hikes. Most market participants are also pricing in a Bank of Canada rate hike due to high inflation. In Canada, annual inflation rose to 3.1% in September from 3.0% in August, its highest level since May’s 3.2%. The increasing prices follow up on a recovering economy with Q2 GDP growth soaring to 0.8%, while the Democratic Party victory in US mid-term elections could soften trade pressures on Canadian growth. Limiting the hawkish certainty, employment fell by 4,700 in October, missing expectations for a 13,600 increase.

Canada’s 10-year government bond yield wavered 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.