The Canadian bond prices took a sharp turn lower on Friday given the upbeat domestic data, while a US jobs report that also topped expectations did little to reverse the negative sentiment on bond prices.
"Bond prices didn't really crawl back at all from the initial reaction to the employment data," said Mark Chandler, fixed income strategist at RBC Capital Markets. With no major Canadian data due out next week, Chandler suggested Canadian bond prices will likely follow the lead of the bigger US treasuries market.
After that the Bank of Canada rate announcement on October 16, the central bank's Monetary Policy Report, and consumer price index data later that week will dictate the tone for Canadian bond prices.
The two-year bond fell 33 Canadian cents to C$99.90 to yield 4.300 percent, while the 10-year bond dropped 89 Canadian cents to C$96.64 to yield 4.431 percent. The yield spread between the two-year and 10-year bond moved to 13.1 basis points from 17.3 at the previous close.
The 30-year bond plunged C$1.40 to C$108.76 to yield 4.464 percent. In the United States, the 30-year treasury yielded 4.860 percent. The three-month when-issued T-bill yielded 4.03 percent, up from 3.93 percent at the previous close.