The Canadian bond prices were mixed, but mostly lower as a rally in North American equities markets undercut the safe haven bid for short dated bonds. The two-year yield was up slightly, but is still down over 70 basis points since October 5, when it was at 4.303 percent.
The lower yield suggests both that the market is pushing the Bank of Canada to lower interest rates, as well as pointing to a general lack of liquidity, said Carlos Leitao, chief economist at Laurentian Bank of Canada. The two-year bond slipped 8 Canadian cents to C$101.28 to yield 3.593 percent. The 10-year bond fell 6 Canadian cents to C$100.02 to yield 3.997 percent.
The yield spread between the two-year and 10-year bond moved to 40.4 basis points, from 43.7 basis points at the previous close. The 30-year bond gained 18 Canadian cents to C$113.39 to yield 4.203 percent. In the United States, the 30-year treasury yielded 4.460 percent.
The three-month when-issued T-bill yielded 3.95 percent, unchanged from the previous close. Illiquid markets and concerns about economic growth combined to nudge the Canadian dollar lower against the US dollar on Friday.
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