The Canadian bond prices fell sharply on Friday, along with US Treasuries which slid after the jobs report as hopes that the US Federal Reserve may soon cut interest rates faded away with the revisions to jobs data for August and earlier months.
The US Federal Reserve's overnight rate is 5.25 percent, while the Bank of Canada's key rate is 4.25 percent. The two-year bond closed down 21 Canadian cents at C$100.68 to yield 3.998 percent, while the 10-year bond fell 55 Canadian cents to C$99.35 to yield 4.081 percent.
The yield spread between the two-year and 10-year bond was 8.8 basis points, down from 9.2 at the previous close. The 30-year bond slipped C$1.20 to C$125.50 to yield 4.157 percent. In the United States, the 30-year treasury yield was 4.8395 percent.
The three-month when-issued T-bill yielded 4.16 percent, up from 4.15 percent at the previous close. The Canadian dollar inched lower against the US currency on Friday, surrendering earlier gains as the market digested tepid domestic jobs figures, while the greenback rose after upward revisions to US jobs data eased concerns over an economic slowdown.
The Canadian dollar ended at C$1.1262 to the US dollar, or 88.79 US cents, down from C$1.1256 to the US dollar, or 88.84 US cents, at Thursday's close. The domestic report showed Canada's economy added jobs in September, as expected, but the new jobs were part-time, and the figures had little effect on expectations that the Bank of Canada will keep interest rates unchanged for a while.
The Canadian dollar initially rose to C$1.1205 to the greenback, or 89.25 US cents, shortly after the domestic data, but then lost ground after the US Labour Department said it had sharply undercounted job growth in the year ended in March.
A tighter US labour market would likely keep upward pressure on wages and inflation, reducing the chance that the US Federal Reserve will cut interest rates.