Global Bond Sell-Off Pushes Canadian Yields to Two-Year High

A global sell-off in government bonds pushed Canadian 10-year yields to their highest level in more than two years, ahead of the Bank of Canada's policy decision.

The surge in Japanese borrowing costs and a reassessment of the U.S. interest-rate outlook added pressure to fixed-income markets, with Canada's 10-year government bond yield rising about 3 basis points to around 3.77% on Tuesday.

This is its highest level since May 2024, while Japan's 10-year government bond yield rose to 3%, for the first time since 1996, and U.S. 10-year Treasury yields climbed to 4.79%, their highest since early 2025.

The moves reflect a sharp shift in expectations for global monetary policy, with markets now pricing a 65% chance of a Federal Reserve rate hike in September, up from about 40% a week earlier.