Canada Bond Yields Edge Lower Amid Global Market Recovery

Canada's benchmark 10-year government bond yield dropped slightly on Thursday as global bond markets stabilized, easing pressure that had pushed Canadian borrowing costs to more than two-year highs.

The 10-year yield fell by about 1.4 basis points from Wednesday's close of 3.798% to around 3.78% at 10:10 a.m. ET.

This follows a sharp selloff in global government bonds driven by concerns over persistent inflation, higher energy prices, and rising government borrowing.

The Bank of Canada kept its policy rate unchanged at 2.25% on Wednesday but delivered a more hawkish message from Governor Tiff Macklem, who stated that policymakers are prepared to raise rates if inflation remains too high.

Canadian bonds had come under pressure as investors reassessed the outlook for domestic interest rates, with markets pricing in a potential rate increase by December.