The US claims data on Thursday helped to send Canadian bond prices lower on Thursday across the board, following their US counterparts. The data prompted a rethink of next week's US nonfarm payrolls release, though it was tempered by revised data showing business activity in the US Midwest was softer than first thought.
"The jobless claims have really begun to suggest that we should realistically at least consider the possibility of a positive payrolls next week. Canada has behaved much more cautiously today," said Eric Lascelles, chief economics and rates strategist at TD Securities. He said supply will likely be a concern for the US market next year, but to a much lesser degree in Canada, which has lower relative deficit- and debt-to-GDP ratios.
"Increasingly the market is agreeing that the recovery is for real and so it's looking for something new to worry about. The obvious concern going forward is going to be the bond supply story, deficits and how these get managed," Lascelles said. "Canada is just incredibly superior in terms of its bond issuance needs.
They're just not nearly as dire, and as a result the market isn't insisting on the same premium in Canada that the US is being forced to pay right now." The two-year Canadian government bond was off 10 Canadian cents at C$99.57 to yield 1.480 percent, while the 10-year bond fell 6 Canadian cents to C$101.10 to yield 3.611 percent.
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