16.12.202516:20:39UTC+00Canada 10-Year Bond Yield Pulls Back

The yield on Canada's 10-year government bond has receded to approximately 3.42%, following a peak of 3.47% on December 9th, its highest since August. This downturn is attributed to diminished domestic inflationary pressures and growing expectations of a more dovish approach from the US Federal Reserve, which are influencing long-term rates. Recent inflation reports indicated that the overall Consumer Price Index (CPI) remained steady at 2.2%, while the trimmed-mean CPI decreased to a ten-month low of 2.8%, bolstering confidence that inflation is aligning with the Bank of Canada's target. Previously, the Bank of Canada decided to maintain interest rates at 2.25%, asserting that this policy level is currently appropriate, which tempered projections of significant immediate rate cuts. Concurrently, a broad decline in expectations for US policy tightening has affected global yields. This shift is due to delayed US labor and consumption data, indicating an economic slowdown with unemployment rising to 4.6% and retail sales remaining stagnant.