The Canadian government bond prices were lower across the curve on Friday as job losses in the United States were not as bad as some market players had feared. That added to optimism that has been building over the past few weeks over the state of the global economy.
"We know the numbers are bad but they've stopped getting worse," said Sheldon Dong, fixed income analyst at TD Waterhouse Private Investment. "I think that's why some people are interpreting the data a bit bullishly." He also pointed to a gradual shift in asset mix as stocks have generally held a better tone in the last three weeks, and hope seems to be mounting.
Optimism about an economic recovery has tended to draw investors to switch out of safe haven investments and into riskier markets such as equities. The two-year bond fell 5 Canadian cents to C$100.23 to yield 1.141 percent. The 10-year bond retreated 61 Canadian cents to C$107.14 to yield 2.930 percent.
The 30-year bond eased C$1.30 to C$123.20 to yield 3.671 percent. The US 30-year bond yielded 3.695 percent. Canada bonds mostly outperformed their US counterparts across the curve, except in the five-year benchmark. The 30-year bond yield was 2.4 basis points below its US counterpart, compared with 2.6 basis points above on Thursday.