Canadian bond prices firmer

The Canadian bond prices jumped on Friday, in line with surging US Treasuries, on the prospect of more gradual US rate hikes.
The Canadian fixed-income market closed early on Friday, following the lead of US markets, which shut early to get a head-start on the July 4 holiday weekend.
Worries about rising rates have pressured prices since late March. Bonds typically fall as rates rise as their fixed payments look less attractive by comparison.
Next week, attention will be focused on Canadian jobs figures for June, which will be released on Friday. Jobs data in April and May sharply beat expectations, sending bond prices lower each time.
The two-year bond rose 20 Canadian cents to C$99.78 to yield 3.116 percent, while the 10-year bond jumped 95 Canadian cents to C$103.80 to yield 4.721 percent.
The yield spread between the two-year and 10-year bond moved to 160.6 basis points from 162.6 at the previous close.
The 30-year bond, due 2029, surged 97 Canadian cents to C$106.52 to yield 5.276 percent. In the United States, the 30-year treasury yielded 5.208 percent.
The three-month when-issued T-bill yielded 2.03 percent, down from 2.04 percent from the previous close.
The Canadian dollar drove to a three-month high on Friday. The currency finished at C$1.3242 to the US dollar, or 75.52 US cents, up sharply from C$1.3338, or 74.97 US cents, at Wednesday's session close.
Canadian markets were closed on Thursday for Canada Day.
The Canadian currency was buoyed earlier in the week by the Liberal Party's federal election victory and a somewhat dovish Fed statement that hinted that future US interest-rate hikes might not be as steep as previously expected.
Friday's June jobs data, which ended several months of robust US jobs gains, validated that sentiment, analysts said.
"Today's employment report basically increases the probability that the next rate hike in the US will be 25 basis points, which would not erode the interest rate disadvantage against the Canadian dollar as much a 50 basis point rate hike would," said Ashraf Laidi, chief currency strategist at MG Financial Group in New York.