Treasury yields fell 18.5 basis points Thursday and the Government of Canada 10-year yield fell about 8, and the difference is the market price of the Bank of Canada decision on October 28. The U.S. 10-year closed near 4.96% and the Canadian 10-year near 3.79%, late-session readings from investingLive and Trading Economics. The gap between the two narrowed to about 117 basis points from about 128.
Two Shocks, One Rate Market
The bond rally was a response to the AI selloff, not to oil. Meta fell about 7% after it raised the low end of its 2026 capital spending forecast to $135 billion and reported negative free cash flow of $2.12 billion for the quarter, according to Reuters. The Nasdaq Composite fell 2.6%, its worst day since June 5, and the Philadelphia Semiconductor index fell 6.7%. The U.S. 2-year yield fell 17.1 basis points to about 4.65%.
Oil moved the other way. Brent settled at $113.17, up about 4%, after the Iranian Revolutionary Guard said it hit four tankers and that three more ships struck mines. President Trump said Iran was inventing the hits to lift prices before the midterms. A drone strike on the Shaybah field of Saudi Aramco also killed two people, according to Rigzone, and CBS News had not verified Houthi claims of four attacks inside Saudi Arabia in 48 hours.
Crude and the Russell 2000 rose while the S&P 500, the Nasdaq and the TSX fell, and the deepest losses sat in semiconductors, materials and Meta rather than in energy.
Brent is the December contract at settlement, reported as about 4%, and gold is the December futures contract at 4:29 p.m. ET. TSX sector moves are from the close.
What the Canadian Front End Is Pricing
Canadian yields fell less because the front end carries its own shock. September producer prices rose 2.0% on the month and 14.5% on the year, and morning reports cited by investingLive put the odds of a hike near 80%. The Canadian dollar closed at 71.32 U.S. cents from 71.14, on a day the Nasdaq fell 2.6%.
The morning Economy framework, a headline rate of 3.1% against core measures of 1.8% and 1.9%, now has a second input, and Canadian yields priced only part of it. Canada reports August retail sales at 8:30 a.m. ET Friday. It is the first domestic test of whether the 80% survives a day when the U.S. 2-year yield fell 17 basis points.
Gold Fell With Yields and the TSX Gave Back Its Recovery
The TSX fell 0.97% to 35,973.45 on a day crude rose 4%, because gold sold off alongside Treasury yields. December gold futures fell $89.60 to $4,060.40, or 2.16%, even as the U.S. 10-year yield fell 18.5 basis points, and copper reached a five-week low as inventories rose. The materials sector fell 4.4%, its lowest level since August 5, and technology fell 1.5%, according to Ad-Hoc-News and the Canadian Press. The Dow closed up 0.02%.
Lower yields normally support gold, and Thursday gold fell with them. The pairing points to positions being sold rather than safety being sought, which is an inference from the two moves and not a reported cause.
The TSX recovered the Monday loss in two sessions and gave the recovery back in one, closing 0.12% above its October 19 close of 35,928.63 after reaching 36,324.99 on Wednesday.
The dashed green line marks the August record close of 37,069.11 and the dashed red line marks the October 19 close of 35,928.63. The shaded band marks the October 22 session.
The index sits at the same level as Monday on a different risk. The Monday decline came with the jump in hike odds, and Thursday came with the AI and metals selloff, leaving a five-day loss of 0.45%. Friday opens about 3.0% below the August record of 37,069.11, with Brent above $113 and E3 and regional foreign ministers meeting in Istanbul.