Canadian government bond yields slide as yield curve flattens

Investing.com -- Canadian government bond yields fell on Thursday, with longer-term debt leading the decline as the gap between short- and long-dated borrowing costs narrowed.

The 10-year government bond yield dropped 3.7 basis points to 3.841%, while the two-year yield eased 1 basis point to 3.224%, according to market data. The move left the spread between the two maturities at 61.7 basis points, down from 64.4 basis points before the day’s declines.

The differing moves highlight a steeper fall in yields at the longer end of the curve, which reflects a range of factors including expectations for inflation, economic growth and the future path of interest rates. Shorter-dated yields tend to respond more directly to expectations for the Bank of Canada’s policy decisions.

The decline in yields comes as investors continue to assess the outlook for monetary policy and the Canadian economy. However, the available market figures do not identify a specific catalyst for Thursday’s move.

Bond yields and prices move in opposite directions, meaning lower yields correspond to higher prices for existing bonds. The latest figures show declines across both maturities, with the 10-year benchmark recording the larger move.

Original Article

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