The Canadian bond prices rallied on Friday as the weak jobs data raised the odds the Bank of Canada will deliver at least one interest rate cut before the end of the year.
"You've got two-years around 2.72 percent, which is more than a quarter below the Bank of Canada rate, so that gives you an idea of what the market thinks the Bank of Canada is going to be doing going forward," said Levente Mady, fixed income strategist at MF Global Canada in Vancouver. Two-year bond yields reflect bond market expectations for the central bank's overnight rate.
The two-year bond rose 1 Canadian cent to C$101.81 to yield 2.712 percent. The 10-year bond climbed 27 Canadian cents to C$105.24 to yield 3.610 percent.
The yield spread between the two-year and 10-year bond was 109 basis points, up from 103 basis points. The 30-year bond jumped 39 Canadian cents to C$116.04 for a yield of 4.051 percent. In the United States, the 30-year treasury yielded 4.544 percent. The three-month when-issued T-bill yielded 2.48 percent, down from 2.53 percent at the previous close.