Iran’s announcement Monday that it was pausing military strikes on Israel gave global bond markets a brief lift and prompted a reciprocal pause from Israel — but Canada’s five-year government bond yield moved in the opposite direction, rising on the day and underlining how domestic pressures continue to compound the geopolitical headwinds facing the country’s mortgage sector. The five-year Government of Canada bond yield, the primary benchmark lenders use to price fixed-rate mortgages, rose to 3.16% on June 8, up two basis points from the previous session, and remains 0.2 percentage points higher than a year ago. That divergence from US markets, where 10-year Treasury yields ticked down sharply following Iran’s announcement, reflects the additional weight Canada’s bond market is carrying ahead of the Bank of Canada’s rate decision on June 10 and persistent concerns about energy-driven inflation feeding through to core prices.

 

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