The yield on the Canadian 10-year government bond eased to about 3.15% as markets repriced the expected path for policy and long run inflation after the Bank of Canada cut its policy rate by the widely anticipated 25 basis points to 2.5% and signalled a durable easing campaign. Domestically a sharper growth slowdown has reinforced that repricing with second quarter GDP contracting roughly 1.6% and exports plunging about 27%, which weakened the growth and trade outlook and made future rate cuts more plausible. At the same time headline inflation eased to 1.9% in August, giving the BoC room to loosen policy without jeopardising its target, and labour market weakness has reduced near term wage pressure. Finally lower US Treasury yields and a general retreat in global long rates have transmitted to Canadian paper and compressed the term premium.