How the Canada curve changed across regimes
Historical yield curves provide more information than a time series of one maturity. They show whether a repricing originated at the policy-sensitive front end, whether long-term yields moved with or against it, and whether the market transitioned through inversion, flattening or steepening as the macro regime changed.
The front end is highly sensitive to the domestic policy path, while the long end is influenced by global duration markets and inflation expectations. Comparing Canada with the U.S. curve can reveal meaningful differences in the two policy cycles.
Bank of Canada easing pulled down the front of the curve while global safe-haven forces influenced longer maturities.
A collapse in energy prices changed Canadian growth expectations and the policy outlook.
Emergency easing was followed by a rapid reversal as inflation became the dominant policy constraint.