2025.08.2615:49:15UTC+00Canada 10-Year Bond Yield Tracks US Yields Higher

Over the past couple of days, the yield on Canada's 10-year government bond has surpassed 3.47%. This rise is attributed to stronger US inflation data and robust economic activities, which have diminished the likelihood of imminent policy easing and increased long-term real interest rates and inflation expectations. Additionally, political developments concerning the Federal Reserve introduced some short-term volatility. Domestically, Canada is anticipated to exceed its previous record for debt issuance this fiscal year. This surge is due to postponed budget announcements and potential new spending initiatives. Meanwhile, the Bank of Canada has kept its policy interest rate steady at 2.75% since March. Although there is speculation surrounding possible rate cuts, the central bank has yet to implement any changes. Furthermore, the recent elimination of retaliatory tariffs on US goods can be interpreted as a move towards collaboration. This development could potentially alleviate inflationary pressures and offer the Bank of Canada greater flexibility in its monetary policy decisions.