Canadian bond prices fall

The Canadian bonds prices fell out of favour with investors who opted to charge back into equities, given higher resource prices and less concern about the US economy. The Toronto Stock Exchange's main index finished with a gain of more than 200 points, due largely to its heavy weighting in resource issues.
While the Dow Jones industrial average had a more modest gain of 48 points. "Certainly in Canada direction was probably established by US markets where that stronger than expected data provided a bit of a bump up in yields," said Paul Ferley, assistant chief economist at Royal Bank of Canada. "So I think that initiated the rise in yields here in Canada but the trend may have been abetted a bit from the weakening in the Canadian dollar."
Canadian data due next week includes March building permits and the Ivey Purchasing Managers Index for April on Tuesday. April housing starts figures come in on Thursday and the April employment report is set for Friday. The two-year bond fell 9 Canadian cents to C$101.94 to yield 2.779 percent. The 10-year bond slid 28 Canadian cents to C$103.03 to yield 3.605 percent. The yield spread between the two- and 10-year bonds was 82.6 basis points, down from 83.3 at the previous close.
The 30-year bond slipped 59 Canadian cents to C$115.31 to yield 4.094 percent. In the United States, the 30-year Treasury yielded 4.584 percent. The three-month when-issued T-bill yielded 2.65 percent, unchanged from the previous close.
The Canadian dollar capped off its second straight losing week with a flat close against the US dollar on Friday, torn between the boost from lofty oil prices and the drag from solid US economic data. The Canadian dollar closed at C$1.0193 to the US dollar, or 98.11 US cents, unchanged from its Thursday's close.
For the week, the Canadian currency fell 0.3 percent even though it rallied sharply on Wednesday - hitting its highest level in a week - after a US Federal Reserve rate cut rattled the US dollar and opened the door to a rally.