FX.co ★ Canada 10-Year Bond Yield Tumbles on Easing Stagflation Concerns

The Canadian 10-year government bond yield fell toward 3.4% as the risk of a severe global energy shock diminished following a conditional ceasefire agreement between the United States and Iran. This sharp drop in anticipated borrowing costs coincided with a slide in WTI crude prices after President Trump postponed planned infrastructure strikes for two weeks to allow for formal negotiations. The easing of geopolitical tensions has largely dispelled the immediate stagflation concerns that dominated in March and has given major central banks the latitude to pursue more dovish policy paths. Markets are now concentrating on the decline in transportation and logistics costs, which had previously threatened to unanchor inflation expectations. Investors are turning their focus to Friday’s US CPI release to assess the lasting impact of the five-week conflict on North American inflation pressures.