Canada: 10-Year Bond Yield Drops From July Highs.

The yield on Canada’s 10-year government bond fell toward 3.48%, retreating from the highest since July as a weakening domestic labor market and cooling industrial activity reshaped the monetary policy outlook. The unemployment rate rose to 6.7% in February following a loss of 83,900 jobs which signaled a deeper contraction in the productive economy and reduced the likelihood of further tightening. Manufacturing sales also declined 3% in January as industrial subsectors faced headwinds from weakening demand. While energy prices remain elevated near 100 dollars per barrel the market is prioritizing signs of economic slack and the 0.6% contraction in growth recorded in late 2025. These developments suggest a widening output gap that limits the ability of policymakers to maintain a restrictive stance despite global commodity volatility. Investors are now pricing in a more cautious approach as the softening labor market offsets the inflationary impact of supply chain shocks.