The yield on the Canadian 10-year government bond fell by more than 10 basis points to a four-week low of 3.05% on Tuesday, marking the 5th straight session of losses, as investors rushed to safe-haven assets recession expectations gained more support. Along with the reinversion of the yield curve in US treasuries, which usually predicts looming recessions, recent manufacturing and service sector activity gauges pointed to faltering momentum across European economies, including in Canada, where the manufacturing PMI fell by 2.2 points to 54.6 in June. Also, preliminary data suggested a contraction in the Canadian economy in May, the first decline in GDP in 12 months. On the monetary policy front, markets expect a 75bps rate hike in the Bank of Canada’s overnight rate for its July meeting, which would be the biggest in 24 years and further raises concerns over pushing the economy into contractionary territory.
Historically, the Canada Government Bond 10Y reached an all time high of 12.44 in March of 1985. Canada Government Bond 10Y - data, forecasts, historical chart - was last updated on July of 2022.
The Canada Government Bond 10Y is expected to trade at 3.36 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 3.80 in 12 months time.