A softer-than-expected August core PCE reading cut Federal Reserve hike odds for October 28 and pulled the three-month yield down, while the 30-year yield rose. The gap between the 10-year and 2-year yields has widened again after narrowing following the September 16 rate hike. The yield pressing on Canadian stocks and the Canadian dollar is the longer-dated market rate, which the Federal Reserve does not directly set.
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The Canadian dollar has weakened against the US dollar as US 10-year yields have risen further above Canadian ones.
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Canadian yields drifted higher through August even though the Bank of Canada held its policy rate at 2.25% and had no decision to make during the month.
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Gold rallied and gold miner shares carried the TSX higher, while Brent ended the month close to where it began.
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