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Scott Rothstein/iStockphoto

The tale of dwindling yields continues as Canadian 10-year rates fell to 1.614 per cent Monday – a record low.

With the euro zone economy in a funk and Asian growth cooling, the safety of Canadian government bonds is extremely attractive to foreigners, adding buying pressure that has pushed yields lower. Non-residents picked up $26.1-billion worth of the Canadian securities in May, according to Statistics Canada, and the majority of these purchases – $16.7-billion – came in the form of government bonds.

Yet the Canadian activity isn't anything too special. U.S. Treasuries continue to set new records, and 10-year government bonds south of the border still have lower yields than Canada's, hovering at 1.46 per cent on Monday morning.

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U.S. corporate bonds are also on fire, and Barclays' U.S. corporate investment grade index hit an all time low of 3.096 per cent last week.

Will these yields last? Who knows. There's always a chance that Canada may need to raise rates in the near future, or the euro zone's crisis may not be as ferocious as the pessimists would have us believe. But at this point, no one is sure of anything.

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