Global bond sell-off lifts Canadian borrowing costs to highest level since 2009
Canadian government bond yields have reached their highest levels since 2009 due to a global sell-off and rising international borrowing costs. Analysts attribute the trend to persistent inflation, large deficits, and uncertainty regarding Federal Reserve policy.
Why it matters
Rising bond yields increase the cost of debt for governments and corporations, potentially slowing economic growth and impacting investment portfolios.
For Canadian fixed-income investors, the global bond sell-off illustrated the sensitivity of longer-term yields to international events beyond the Bank of Canada’s control. Adrian Wyld/The Canadian Press
A slump in global bond prices pushed long-term borrowing costs across developed markets to multiyear highs on Tuesday, lifting Canadian long-term government bond yields to their highest level since 2009.
The rise in Canadian yields came as U.S. 30-year Treasury yields, which have been climbing since the start of the war with Iran , touched their highest level since 2007. For Canadian fixed-income investors, the global bond sell-off illustrated the sensitivity of longer-term yields to international events beyond the Bank of Canada’s control.
Rising yields increase the cost of debt financing for government and corporate borrowers, but also weigh on the price of outstanding bonds.
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