The Canadian bonds slipped on Friday, following the lead of weaker US treasuries, but ended the session little changed as flows dried up ahead of the weekend. Next week, the market will be closely watching December manufacturing and wholesale trade data, looking for more signs of the economic impact of the Canadian dollar's 2003-04 gains. As well, Bank of Canada Governor David Dodge and Deputy Governor Sheryl Kennedy will make speeches, while US Federal Reserve Alan Greenspan will testify before congressional committees on Wednesday and Thursday.
In its most recent Monetary Policy Report update, the Bank of Canada said it was still committed to the idea of higher interest rates in the long term, but rate hikes would come at a slower pace than was forecast three months earlier.
The two-year bond slipped 3 Canadian cents to C$100.56 to yield 2.926 percent, while the 10-year bond slid 5 Canadian cents to C$106.31 to yield 4.174 percent.
The yield spread between the two-year and 10-year bond moved to 124.8 basis points from 125.5 basis points at the previous close.
The 30-year bond, due 2029, fell 13 Canadian cents to C$117.40 to yield 4.639 percent. In the United States, the 30-year treasury yielded 4.478 percent.
The three-month when-issued T-bill yielded 2.48 percent, up from 2.47 percent at the previous close.
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