Global Bond Sell-Off Lifts Canadian Borrowing Costs to Highest Level Since 2009
A global bond sell-off has pushed Canadian long-term government borrowing costs to their highest level since 2009, according to recent data.
The rise in yields came as U.S. 30-year Treasury yields touched their highest level since 2007, with analysts pointing to a combination of factors driving the market move.
Nicolas Normandeau, portfolio manager at Fiera Capital, noted that a 'patient' Federal Reserve has been putting pressure on longer-term bonds in the United States, combined with persistent inflation and large deficits.
Ambiguity around the Fed's policy framework was also cited as a contributing factor by Jonas Goltermann, chief markets economist at Capital Economics, who pointed to investors awaiting clarity from a keynote speech next Friday by Fed chair Kevin Warsh in Jackson Hole, Wyo.
The term premium on U.S. 10-year zero coupon bonds has soared since the end of February, rising more than a third of a percentage point to levels last seen in 2011, according to data from the Federal Reserve Bank of St. Louis.