FX.co ★ Canada 10-Year Yield Near Three-Year High

Canada’s 10-year government bond yield climbed to around 3.95% in September, its highest level in nearly three years, amid a global bond selloff driven by a crude oil rally and the release of in-line domestic CPI data. The renewed surge in oil prices intensified inflationary pressures, as Canadian consumer price growth continued to be heavily influenced by energy-related goods. Headline CPI increased 3.0% year over year in August, unchanged from July and in line with market expectations. However, underlying price pressures showed no broad-based acceleration, with the core measures monitored by the BoC remaining stable near the 2% target. Even so, the ongoing oil rally is stoking inflation concerns and reinforcing expectations of a potential US Federal Reserve rate hike on September 16th. The BoC kept its policy rate at 2.25% at its most recent meeting, but Governor Macklem emphasized that policymakers are prepared to raise rates if inflation stays elevated.