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CIBC Says Bond Yields Ease Off as Bank of Canada Policy Statement Comments Suggest Risks Ahead on Downside

BY MT Newswires | ECONOMIC | 12/10/25 10:30 AM EST

10:30 AM EST, 12/10/2025 (MT Newswires) -- The Bank of Canada left the overnight rate unchanged at 2.25% on Wednesday and reiterated that it believes that rates are at about the right level, said CIBC.

Policymakers played down recent upside surprises in data, pointing to only some signs of improvement in the labor market, with trade-sensitive sectors still weak and hiring intentions muted, and citing that final domestic demand was flat in Q3, with the headline reading driven by volatility in trade, noted CIBC.

Policymakers are looking for better signs of growth in 2026, but the comments that push back on recent upside surprises in the data seem to suggest that the risks ahead would be to the downside, and that resulted in bond yields easing off, said CIBC.

CIBC added it looks for progress on renewing the CUSMA trade deal in 2026 to support growth ahead, and CIBC sees the overnight rate remaining at its current level through end-2026.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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