29.09.202621:29:29UTC+00Canada 10-Year Yield Rises Toward Three-Year High

Canada’s 10-year government bond yield climbed toward 4% in late September, nearing a three-year high as the selloff in US Treasuries resumed. Global government bonds have come under pressure as oil price gains, driven by tensions in the Middle East, fuel expectations that central banks, including the Federal Reserve, will raise interest rates further. In the United States, robust economic activity, together with concerns over large fiscal deficits and mounting government debt, is also weighing on the bond market.

By contrast, Canada’s advance estimates showed real GDP rising 0.2% in August, with growth in mining and quarrying and in retail trade partially offset by weaker oil and gas extraction. GDP was essentially flat in July, ending a three-month stretch of expansion. While the data were broadly in line with expectations, they pointed to a softer start to the third quarter, reinforcing expectations that the Bank of Canada will keep interest rates on hold. In addition, the US ban on various Canadian goods took effect, further clouding Canada’s growth outlook.