The Canadian bonds fell back after rising sharply for three straight sessions on Friday, influenced by US Treasuries, which were hurt by the hawkish Fed comments and US data. Strong US industrial production data weighed on the market, while a bigger-than-expected drop in monthly wholesale prices was not enough to stop the retreat. Analysts said they expect little market action on Monday with US markets closed. Wednesday's release of December consumer inflation will be closely watched, however, particularly ahead of the Bank of Canada's January 25 interest-rate policy announcement.
The two-year bond slid 4 Canadian cents to C$100.54, to yield 2.950 percent, while the 10-year bond retreated 18 Canadian cents to C$105.67 to yield 4.259 percent. The yield spread between the two-year and 10-year bond moved to 130.9 basis points from 130.5 at the previous close.
The 30-year bond, due 2029, fell 25 Canadian cents to C$113.73 to yield 4.789 percent. In the United States, the 30-year treasury yielded 4.735 percent.
The three-month when-issued T-bill yielded 2.48 percent, unchanged from the previous close.
The Canadian dollar dropped hard on Friday, giving up most of Wednesday's big gains as strong US economic signals and hawkish US Federal Reserve comments boosted the greenback against most currencies.