Canada's Bond Yield Surges on Strong Jobs Data and Q2 GDP Growth

Canada's 10-year government bond yield rose to a three-month high on strong jobs data. The yield increased to 3.65% following a report that Canadian employment grew by 75,100 jobs in July, surpassing expectations of a 15,000 gain.

The unemployment rate fell to a two-year low of 6.4%, while the economy expanded at an annualized 3.4% in the second quarter, beating the Bank of Canada's forecast of 2.5%. The stronger labor market has raised expectations of a potential interest rate hike if energy prices remain elevated.

The Bank of Canada held its policy rate at 2.25% for a sixth consecutive meeting, noting that the economy was adjusting to recent shocks and energy-driven inflation pressures were easing. However, policymakers warned that inflation expectations remained high and questioned the durability of the recovery.