The yield on the Canadian 10-year government bond traded around 1.75%, the highest since November 24th, tracking an increase in US Treasury yields as investors wonder if the Fed will need to adopt a tighter monetary policy to fight hot inflation. Fed Chair remarks at his Senate confirmation hearing on January 11th eased some worries over a more hawkish approach but later comments from Fed Governor Lael Brainard, and officials Patrick Harker and Charles Evans raised further concerns the Fed will be more aggressive. Also, investors remained optimistic as studies showed that the Omicron variant is less severe than previous strains, albeit more infectious, gearing up traders to bet that the economic recovery will not derail. A more robust economic recovery strengthens the appeal for higher rates from the BoC, which dashed investors’ expectations in its last meeting arguing that the new variant Omicron had raised uncertainty around the economic recovery.
Historically, the Canada Government Bond 10Y reached an all time high of 12.44 in March of 1985. Canada Government Bond 10Y - data, forecasts, historical chart - was last updated on January of 2022.
The Canada Government Bond 10Y is expected to trade at 1.85 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 2.10 in 12 months time.