19.01.202614:23:25UTC+00Canada 10-Year Bond Yield Climbs After Mixed Inflation Print

The yield on Canada's 10-year government bond surpassed 3.39% on Friday, recovering from its early December low of 3.354%, which it had reached on January 15th. This increase is attributed to stronger headline inflation figures and rising US Treasury yields, which have bolstered Canadian long-term interest rates. December's headline Consumer Price Index (CPI) unexpectedly rose to 2.4%, complicating the narrative of imminent monetary easing, despite underlying pressures easing as indicated by the median core rate dropping to a one-year low of 2.5%. This situation suggests that the Bank of Canada is likely to adopt a cautious approach regarding the timing and pace of future interest rate cuts. Meanwhile, softer economic indicators, such as slower employment growth, increasing unemployment rates, and waning growth momentum towards the end of the year, have mitigated inflation risks and maintained demand for long-duration assets. On the international front, US Treasury yields have risen due to renewed political uncertainty after President Donald Trump threatened to impose new tariffs on eight European countries.