FX.co ★ Canada Bond Yields Hold Firm

The yield on Canada’s 10-year government bond held at 3.54%, after touching a two-month high of 3.58%, supported by a rebound in US Treasury yields that lifted global bond markets. US yields recovered following recent declines as investors continued to evaluate the outlook for Federal Reserve policy. In Canada, a steeper drop in yields was limited by the Bank of Canada’s relatively hawkish stance. At its July meeting, the central bank left interest rates unchanged, as widely expected, but emphasized that economic growth is likely to remain solid in the coming quarters. It also raised this year’s inflation forecast, citing higher energy costs stemming from the conflict in the Middle East.