FX.co ★ Canada’s 10-Year Yield Rises on Hawkish BoC Bets

Canada’s 10-year government bond yield climbed to about 3.90% in October, its highest level in nearly two weeks, after the release of September inflation data. The annual inflation rate rose to 3.1%—a four-month high—driven mainly by higher gasoline prices, though it still came in slightly below market expectations of 3.2%.

While more expensive energy pushed headline inflation higher, core inflation remained subdued. The CPI-median measure slowed to 1.9%, and CPI-trim eased to 1.8% in September, signaling limited underlying price pressures.

Despite the softer-than-expected reading, markets continued to see the Bank of Canada’s policy stance as leaning toward tighter conditions, as officials highlighted upside risks to inflation. Governor Tiff Macklem said on Saturday that the central bank expects to significantly raise its quarterly inflation forecast this month, reinforcing hawkish comments made the previous week about energy-driven price pressures.