The Canadian bond prices rallied on Friday as US government data showed the core inflation rate at 2.2 percent in May, which was below forecasts of 2.3 percent and a relief to bond investors who watched prices drop as the US rate outlook has shifted.
Weaker US data covering industrial output and capacity utilisation also helped lift prices, which have come off multiyear lows hit earlier in the week. The two-year bond rose 12 Canadian cents to C$98.31 to yield 4.666 percent, while the 10-year bond climbed 61 Canadian cents to C$95.59 to yield 4.607 percent.
The yield spread between the two-year and 10-year bond was -5.9 basis points, compared with -3.8 basis points at the previous close. The 30-year bond rose C$1.45 to C$118.65 to yield 4.522 percent. In the United States, the 30-year treasury yielded 5.248 percent. The three-month when-issued T-bill yielded 4.40 percent, unchanged from 4.40 percent at the previous close.