Canada Capital Markets

The 10-year yield remained stubbornly high despite rate cuts. Since the Bank of Canada (BoC) began reducing interest rates in June 2024, short-term rates, such as the yield on three-month Treasury bills, have declined in line with the overnight rate. On the other hand, the 10-year Treasury yield rose notably between September 2024 and January 2025. This trend was also observed in the U.S., which led to heightened market volatility entering 2025. Canada’s short-term rates are closely tied to movements in the overnight rate, but its long-term yields are influenced by a range of factors, including the government’s fiscal health, long-term inflation expectations, economic growth prospects, central bank guidance and developments in the U.S. Because long-term rates often serve as a benchmark in the credit market, they have significant implications for the commercial real estate sector.