Canadian bond prices end mixed

The Canadian domestic bond prices ended mixed on Friday, feeling pressure from strong stock markets on the short end, but with no economic news and summer trading volumes low, the market largely drifted.
Retail sales and CPI data should shake the market out of its lethargy next week, as will the run-up to the Bank of Canada's September 7 interest rate announcement, which is widely expected to be a 25 basis point increase.
The central bank last raised rates in October 2004, and has been on hold since then as it assessed the negative economic impact of the past rise of the Canadian dollar.
Recent data has suggested the economy is once again operating near capacity, the bank has said.
Bond prices have largely eased over the past two months in anticipation of domestic rate hikes. But the retreat has been erratic, as mixed economic data have left economists unsure how aggressive the bank will be after September 7.
The two-year bond fell 5 Canadian cents to C$99.77 to yield 3.133 percent, while the 10-year bond rose 10 Canadian cents to C$104.78 to yield 3.906 percent.
The yield spread between the two-year and 10-year bond moved to 77.3 basis points from 81.2 at the previous close.
The 30-year gained 31 Canadian cents to C$124.63 to yield 4.233 percent. In the United States, the 30-year treasury yielded 4.420 percent.
The three-month when-issued T-bill yielded 2.72 percent, up from 2.71 percent from the previous close.
The Canadian dollar gained ground against the US currency on Friday, rebounding from the previous day's weakness on resurgent oil prices.
The currency finished at C$1.2116 to the US dollar, or 82.54 US cents, up from C$1.2185 to the US dollar, or 82.07 US cents, at Thursday's close.
As has been the case all week, traders stayed focused on commodity prices, and in particular oil, which is often closely correlated to the movement of the loonie because of Canada's status as a net oil exporter.
With no significant Canadian or US economic data on Friday, oil's rise back up to around $65 per barrel was the whole show, dragging the Canadian dollar higher against most other currencies.