The Canadian bond prices reversed early strength as rising North American stock markets gathered momentum and despite dismal US factory data. A US index of manufacturing activity fell more than expected to a 28-year low, but its boost to government debt was short-lived. "I'm still a little surprised by the magnitude of the selloff," said TD's Lascelles.
"One theme could be that there was a quest for liquidity and safety going into the end of the calendar year. Of course that now unwinds so there's scope for selling government bonds and buying products of other sorts, including stocks." The two-year Canada bond fell 13 Canadian cents to C$102.97 to yield 1.166 percent, while the 10-year bond slid C$1.35 to C$111.55 to yield 2.841 percent.
The yield spread between the two-year and 10-year bond was 167.5 basis points, versus 159 at the previous close. The 30-year bond declined C$2 to C$125.70 to yield 3.555 percent. In the United States, the 30-year treasury yielded 2.823 percent.