The Canadian bond prices rebounded from recent losses to close higher across the curve as a Bank of Canada rate cut next week is still considered a certainty, despite the latest jobs data, which came in below expectations.
One expert said dealers likely took the domestic jobs data with a grain of salt given that it showed the Ontario and Quebec had job gains while Alberta - in the midst of an energy boom - had job losses. "Because of the suspect nature the jobs data it's not going to have an impact on what the Bank of Canada does on Tuesday and that's why you didn't quite get the bond market volatility," said Sheldon Dong, fixed income analyst at TD Waterhouse Private Investment.
A Reuters poll taken after the jobs data showed all 12 primary dealers expect the Bank of Canada to lower its key overnight rate by 25 basis points to 2.75 percent when it announces its next scheduled rate decision on June 10. The two-year bond rose 2 Canadian cents to C$101.67 to yield 2.876 percent. The 10-year bond added 37 Canadian cents to C$102.62 to yield 3.655 percent.
The yield spread between the two-year and 10-year bond was 77.9 basis points, down from 81.8 at the previous close. The 30-year bond gained 72 Canadian cents to C$114.82 for a yield of 4.119 percent. In the United States, the 30-year Treasury yielded 4.632 percent.
The three-month when-issued T-bill yielded 2.55 percent, unchanged from the previous close. The Canadian dollar closed at C$1.0193 to the US dollar, or 98.11 US cents, down from C$1.0178 to the US dollar, or 98.25 US cents, at Thursday's close. For the week, the currency fell 2.6 percent after sliding in four of the week's five sessions.