The yield on Canada’s 10 year government bond was around 3.43% halting its surge to the highest level since early September of 3.47% seen December 9th, as markets digested the Bank of Canada policy move and forward guidance. The Bank of Canada’s December hold at 2.25% and its repeated judgement that the current policy rate is “about right,” together with language that played down recent upside surprises and flagged Q4 trade-driven volatility, reduced the market’s conviction that tighter policy was imminent and trimmed expectations for higher rates. At the same time the data complex is mixed enough to blur a clear tightening path even if growth surprised in Q3 at an annualized 2.6% and the unemployment rate eased to about 6.5% while CPI sits near 2.2% and core measures remain elevated, a combination that keeps the BoC cautious rather than aggressively hawkish. Externally markets moved to price a Federal Reserve easing cycle which pushed US Treasury yields lower.