The Canadian long-dated bond prices rose on Friday, while 2-year notes were little changed on the weak US growth report and sliding Canadian factory prices data. "We did get some negative numbers on the producer cost front, and that could suggest less inflation pressures in the future," said Eric Lascelles, strategist at TD Securities.
Canadian factory prices fell a sharper than expected 0.4 percent in June from May, due primarily to lower prices of primary metals and lumber, Statistics Canada said on Friday. Analysts had expected a decline of just 0.1 percent.
The soft GDP data also threw a charge into US treasuries, which sharply outperformed most Canadian bonds, although long-dated 30-year debt managed to keep pace. The two-year bond rose 1 Canadian cent to C$99.29 to yield 4.150 percent, while the 10-year bond climbed 27 Canadian cents to C$101.12 to yield 4.345 percent.
The yield spread between the two-year and 10-year bond was 19.5 basis points, down from 22.7 at the previous close. The 30-year bond gained 58 Canadian cents to C$120.98 to yield 4.408 percent. In the United States, the 30-year treasury yielded 5.075 percent. The three-month when-issued T-bill yielded 4.18 percent, unchanged from the previous close.