Canadian bonds climb on trade data

The Canadian bond prices were mostly higher on Friday as the weak US consumer sentiment figures pushed influential US Treasuries higher, while weaker North American equity markets freed up cash to invest in bonds.
The rise came in spite of the strong Canadian trade data, which seemed to reduce expectations that the Bank of Canada will cut interest rates on March 2.
The Bank of Canada cut its trend-setting overnight rate to 2.50 percent in January, and promised to cut rates further if evidence emerged that the stronger Canadian dollar was putting too much pressure on the domestic economy.
The comparable US fed funds rate is 1 percent.
The only domestic economic data of note next week will be Friday's consumer price index, which is closely watched by the Bank of Canada, and could sway the market firmly one way or another about the chances for a March rate cut.
The two-year bond was unchanged at C$101.03 to yield 2.406 percent, while the 10-year bond gained 10 Canadian cents to C$106.30 to yield 4.414 percent.
The yield spread between the two-year and 10-year bond moved to 200.8 basis points from 202.2 at the previous close.
The 30-year bond, due 2029, rose 25 Canadian cents to C$109.35 to yield 5.088 percent. In the United States, the 30-year treasury yielded 4.926 percent.
The three-month when-issued T-bill yielded 2.17 percent, unchanged from the previous close.
The Canadian dollar soared early against the US dollar on Friday on news that the US trade deficit and the Canadian trade surplus widened in December but by day's end the currency had lost most of its gains.
The Canadian dollar finished at C$1.3163 to the US dollar, or 75.97 US cents, up from C$1.3189 to the US dollar, or 75.82 US cents, at Thursday's close.
The currency sprinted to a two-week high of C$1.3069, or 76.52 US cents, at mid-morning, as a trio of economic data sent the US greenback reeling.
Canada's trade surplus jumped more than expected to C$5.4 billion in December, while for the year, the trade surplus rose nearly C$2 billion to C$59.81 billion despite the Canadian dollar's unprecedented 20 percent rise against the US dollar.