The yield on the Canadian 10-year government bond eased below 3.14% from the two-month high of 3.26% reached on November 19th, tracking US Treasury yields lower after a run of softer US data and dovish Fed commentary set the directional backdrop toward easing. At home the Bank of Canada’s October easing to 2.25% and its data dependent guidance reduced the odds of a higher for longer policy path and trimmed the policy premium embedded in long paper. Key domestic indicators have also softened enough to weaken the growth and inflation impulses that lift long yields, with headline inflation cooling to about 2.2% in October and housing starts plunging roughly 17% that month, both of which blunt the near term case for higher real yields. However, the newly approved budget and a wider fiscal deficit remained an offsetting factor that is likely to apply upward pressure on yields over time through heavier federal issuance.