The 10-year Canadian government yield slipped toward 3.07%, nearing six-month lows as markets moved to price in greater odds of monetary easing on both sides of the border. In Canada, markets priced a near-certain 25bp Bank of Canada cut and Washington’s abrupt termination of trade talks raised the prospect of tariffs and weaker exports, increasing the likelihood that tariff and sectoral frictions will squeeze business investment and export revenues, depressing growth and nudging the BoC toward further easing to offset those effects. Markets now assign a high probability to a 25bp cut at the October 29th meeting after a run of soft domestic activity and survey readings. In the United States, a softer-than-expected inflation print firmed market bets that the Federal Reserve will cut rates again this year and sent Treasury yields down.
