Canadian Bond Yields Surge to Multi-Year Highs Amid US Treasury Selloff

Canadian bond yields have surged to multi-year highs, mirroring the selloff in US Treasuries. The Bank of Canada held its policy rate at 2.25% for a seventh consecutive decision, but market expectations now point to hikes this year.

The Canadian 10-year yield rose to 3.99% on September 24, its highest level since November 2023, while the US Treasury yields touched multi-decade highs, with the 30-year yield reaching just over 5.46% and the 10-year yield hitting 5.14%.

For Canadian pension plans, higher long-term yields affect both the value of existing bond holdings and the discount rates used to measure liabilities. TD Economics notes that market expectations have shifted earlier than expected, with some strategists predicting a third increase in US interest rates this year or early in 2027.