Canadian 2-year yield hits two-year high as Bank of Canada hikes interest rates
TLT•Canadian 2-year bond yields reached their highest level since August 2024 after the Bank of Canada raised its key interest rate by 25 basis points to 2.50%. The loonie edged 0.1% higher against the U.S. dollar.
1. Rate hike lifts yields
Canadian bond yields rose after the Bank of Canada raised interest rates for the first time in more than three years. The central bank said further increases might be needed to prevent soaring energy costs from driving broader inflation.
2. Markets weigh another hike
The 2-year yield rose as much as 7.2 basis points to 3.441% before pulling back to 3.413%. The 10-year yield was up 2.4 basis points at 3.885%. Investors saw a 45% chance of another hike in December and had fully priced in a second increase by January, swap market data showed.
3. Loonie and oil higher
The loonie traded 0.1% higher at 1.4035 per U.S. dollar. Oil prices rose as fighting in Yemen and an attack on a refinery in Saudi Arabia renewed concerns about supply disruptions.
