The Canadian bond prices ended mixed and were barely changed on Friday as dealers avoided huge positions ahead of key economic data next week and the Bank of Canada's Monetary Policy Report Update. A Bank of Canada rate cut is already mostly priced into the market, so the MPR Update on Thursday and the CPI report on Friday will likely have more impact on bond prices.
The latest piece of domestic data showed manufacturing sales rose more than expected in November, but it had little impact on bonds since it was so dated. "It's almost ancient history looking at November because the US economy really ran into that trouble it seems in December," said Porter.
The two-year bond rose 2 Canadian cents to C$101.83 to yield 3.224 percent. The 10-year bond dropped 21 Canadian cents to C$101.57 to yield 3.798 percent. The yield spread between the two-year and 10-year bond was 57.4 basis points, up from 53.2 basis points at the previous close.
The 30-year bond fell 67 Canadian cents to C$115.65 to yield 4.080 percent. In the United States, the 30-year Treasury yielded 4.285 percent. The three-month when-issued T-bill yielded 3.61 percent, unchanged from the previous close. The Canadian dollar fell for the third straight week versus the US dollar on Friday as concerns about what a slowdown in the United States could have on the domestic economy rattled the domestic currency.
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