The Canadian bond prices rose sharply during the session on Friday, falling at first after the strong Canadian employment report, but then following Treasuries higher after the US data.
However, the strong Canadian put a lid on the Canadian gains, thus widening Canada-US spreads. Analysts said this trend would likely continue, given the strong Canadian data and rate hike expectations.
"You're definitely going to see bond spreads moving in favor of the Canadian dollar," said Guatieri.
"The US data casts doubt on the sustainability of economic expansion and raises the risk of the Fed moving to the sidelines in the near term."
The Bank of Canada's overnight rate is 2.25 percent, while the US fed funds rate is 1.75 percent. Higher interest rates generally diminish the attractiveness of bonds as investments.
Canadian markets will be closed on Monday for the Thanksgiving holiday.
The two-year bond was up 11 Canadian cents at C$99.91 to yield 3.296 percent, while the 10-year bond rose 67 Canadian cents to C$102.90 to yield 4.622 percent.
The yield spread between the two-year and 10-year bond moved to 132.6 basis points from 135.9 basis points.
The 30-year bond was 97 Canadian cents higher at C$108.88 to yield 5.111 percent. In the United States, the 30-year treasury yielded 4.904 percent.
The three-month when-issued T-bill was at 2.57 percent, unchanged from the previous close.
The Canadian dollar topped 80 US cents on Friday for the first time in 11-1/2 years, as strong Canadian jobs data contrasted with a weak US jobs report, boosting confidence in the domestic economy and raising expectations for higher interest rates.
The currency drove as high as C$1.2495 to the US dollar, or 80.03 US cents, its highest point since March 2003.
By the close, the currency had retreated to C$1.2521 to the US dollar, or 79.87 US cents, up sharply from C$1.2613, or 79.28 US cents, at Thursday's close.