2026.09.2320:53:55UTC+00Canada 10-Year Yield Nears Three-Year High

Canada’s 10-year government bond yield climbed to about 3.95% in September, approaching a three-year high as concerns over energy-driven inflation persisted. Oil prices advanced following a five-week pause in the rally that began after the US–Iran war, amid uncertainty surrounding diplomatic efforts to end the conflict and reopen the Strait of Hormuz. Robust US economic data reinforced expectations that the Federal Reserve could deliver another interest rate hike this year. Yields on US Treasuries surged to multi-decade highs, adding pressure on Canadian bonds, whose yields typically move in line with US rates. Fed projections indicated that most policymakers anticipate one more rate increase before the end of 2026. At its September meeting, the Bank of Canada left its benchmark policy rate unchanged at 2.25%, in line with market expectations. However, it warned that inflation risks had risen and that newly imposed tariffs had increased uncertainty around the growth outlook. Governor Macklem emphasized that policymakers stand ready to raise rates further if inflation remains elevated.