Canadian bond prices tumble

The Canadian bond prices gave up early gains on Friday, following US treasuries lower after a strong read on US consumer confidence.
Bonds have been climbing in recent sessions as the market has priced in the Tuesday rate cut by the Bank of Canada.
"I find it hard to believe that the bank, at this point would disappoint, but if the bank does disappoint, then we'll see a downward correction in the bond market," Tal said.
A recent Reuters poll showed nine of Canada's 13 primary dealers expect the central bank will cut its overnight rate by 25 basis points to 2.50 percent on Tuesday, a shift in sentiment after some unexpectedly soft trade data earlier in the week.
The two-year bond slipped 2 Canadian cents to C$100.33 to yield 2.815 percent, while the 10-year bond declined 40 Canadian cents to C$105.10 to yield 4.573 percent.
The yield spread between the two-year and 10-year bond moved to 175.8 basis points from 171.8 at the previous close.
The 30-year bond, due 2029, sank 45 Canadian cents to C$108.43 to yield 5.150 percent. In the United States, the 30-year treasury yielded 4.893 percent.
The three-month when-issued T-bill yielded 2.38 percent, down from 2.40 percent at the previous close.
The Canadian dollar weakened for the third straight day on Friday, falling to a two-week low as the prospect of lower interest rates kept the currency from keeping up with a suddenly resurgent greenback.
The currency finished at C$1.3002 to the US dollar, or 76.91 US cents, closing at its lowest level since late December. This was down from C$1.2959, or 77.17 US cents, at the end of Thursday's session.
Following the trend of the last few days, the US dollar benefited from strong economic data and the lingering effects of comments from euro zone officials expressing concern over the recent surge of the European currency.
But traders said the Canadian dollar was still at a comfortable level, particularly as the market has priced in a Bank of Canada interest rate cut for next Tuesday.
"The Canadian dollar has performed quite well, when compared to the euro, sterling, yen, and Swiss franc over the past few days" said Jack Spitz, director of foreign exchange at National Bank of Canada.
"Those currencies have been sold off quite dramatically against the US dollar, and the Canadian dollar more or less held its own."
Helping drive the greenback was a bullish reading on the University of Michigan's preliminary January survey on consumer sentiment, which came in at its highest level in more than three years.
Also, foreign purchases of US assets jumped to $87.6 billion in November, more than three times the level in October.