Canada 10-Year Bond Yield Drops Amid Recession Fears
The yield on Canada's 10-year government bond has declined to below 2.92%, approaching the two-year low of 2.83% recorded in early March. This movement is attributed to investors gravitating towards safe-haven assets due to heightened global recession risks triggered by U.S. tariff policies. President Trump's imposition of a baseline 10% tariff on all imports—and even higher rates on some significant trading partners—has raised concerns about a slowdown in U.S. economic activity and potential retaliatory actions. The situation is exacerbated by declining domestic export figures, with merchandise exports dropping by 5.5% in February and the trade balance shifting from a $3.1 billion surplus in January to a $1.5 billion deficit. Additionally, the composite PMI has plummeted to its lowest point since June 2020. These factors have led to increased demand for Canadian government bonds, resulting in lower yields as market participants seek to reduce risk amid escalating global trade disruptions.
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