Canadian government bond yields slide as yield curve flattens

Canadian government bond yields experienced a decline on Thursday, with longer-term debt leading the drop as the yield curve flattened. The 10-year government bond yield decreased by 3.7 basis points to 3.841%, while the two-year yield fell by 1 basis point to 3.224%. This resulted in a narrowing spread between the two maturities, dropping from 64.4 basis points to 61.7 basis points.

The decline in yields is attributed to various factors, including expectations for inflation, economic growth, and the future path of interest rates. Shorter-dated yields are more directly influenced by expectations for the Bank of Canada's policy decisions. The market figures do not provide a specific catalyst for this move, but it reflects investors' ongoing assessment of the outlook for monetary policy and the Canadian economy.

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