Canadian Bonds Gain on Tracking Weak Crude
The Canadian government bonds gained on Friday as investors pour into safe-haven assets amid losses in riskier assets including stocks and oil. The yield on the benchmark 10-year bonds, which moves inversely to its price rose 4bps to 1.340 pct and the yield on the 2-year bonds jumped 3 bps to 0.569 pct by 1300 GMT.
The Canadian bonds have been closely following developments in oil markets because of their impact on inflation expectations, which are well below the Bank of Canada's target. Today, the crude oil prices fell in early trading on Friday as a stronger USD weighed and Russia warned that a global crude supply overhang could last into next year. In Canada, crude production outages from oil sand fields following forced closures due to wildfires still stood around 1 million bpd as of Wednesday, although operators said they were gradually ramping up output. The International benchmark Brent futures fell 1 pct to $47.60 and West Texas Intermediate (WTI) tumbled 1.56 pct to $45.97 by 1300 GMT.
The markets will now focus on the next week’s April core CPI and March retail sales (1230 GMT) on Friday. Meanwhile, the Canadian Stock futures pointed to a lower opening for Canada's main stock index on Friday as a strengthening U.S. dollar ended a three-day bull run in oil. June futures on the S&P TSX index were down 0.25 pct at 11:30 GMT.