The Canadian bonds slipped on Friday as the domestic economic numbers upped the odds of a September rate hike by the Bank of Canada. But some issues rose as the US reports showed benign inflation, a widening US trade gap, and softer consumer sentiment, all of which suggested it was less likely that the Federal Reserve would have to hike interest rates at all of its remaining meetings this year.
"Today's numbers just drive home the point that Canada grew a lot faster than the US did in Q2, and that's one of the big factors why Canadian bonds were weak today and US bonds were a little bit stronger," Porter said.
The two-year bond fell 5 Canadian cents to C$100.06 to yield 2.966 percent, while the 10-year rose 1 Canadian cent to C$104.81 to yield 4.577 percent.
The yield spread between the two-year and 10-year bond moved to 161.1 basis points from 164.5 at the previous close.
The 30-year bond, due 2029, gained 19 Canadian cents to C$108.47 to yield 5.141 percent. In the United States, the 30-year treasury yielded 5.018 percent.
The three-month when-issued T-bill yielded 2.08 percent, up from 2.07 percent from the previous close. The Canadian dollar snapped a four-day losing streak on Friday and made up a week's losses against the US dollar in a single session, powered by a big rise Canada's trade surplus as the US trade deficit also soared.
Analysts said the trade reports triggered one of the biggest single-day rises for the Canadian dollar on record. It finished Friday's session at C$1.3089 to the US dollar, or 76.40 US cents, up from C$1.3300 to the US dollar, or 75.18 US cents, at Thursday's close.
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