Canadian bond prices were mostly lower in Friday, with the short end hit hardest as market players absorbed the jobs figures and the modest gains in equity markets, and considered the possibility that US rates could rise sooner than expected. Ferley said the economic data, and influence from US Treasury movements may be putting pressure on bonds.
US Treasury debt prices sank, most strongly in the short end, as some rising expectations the Fed may move sooner rather than later to boost the recommended rate for overnight lending between banks. The benchmark two-year government bond dropped 21 Canadian cents to C$99.95 to yield 1.276 percent, while the 10-year bond fell 25 Canadian cents to C$102.65 to yield 3.434 percent.
The 30-year bond gained 30 Canadian cents to C$117.10 to yield 3.981 percent. The comparable US Treasury issue yielded 4.640 percent. Canadian bonds outperformed US treasuries across the curve. The Canadian 30-year bond was 65.9 basis points below the US 30-year yield, compared with 59.1 basis points from Thursday.