The Canadian bonds gained on Tuesday as Canada’s February trade deficit rose to the highest level in 6-months. The benchmark 10-year bonds yield, which is inversely propositional to bond price fell 4.41 pct to 1.71 pct and 3-year bonds yield dipped 3.94 pct to 0.56 pct at 14:00 GMT.
The rise in bonds prices were also driven by the fall in the prices of crude oil. The Brent crude oil, a global benchmark, was down 0.05 pct at $37.68 a barrel.
Canada's trade deficit unexpectedly jumped to CAD 1.91 billion ($1.45 billion) in February from C$628 million in January as exports slumped by their most in nearly seven years, Statistics Canada data indicated on Tuesday.
The deficit was far greater than the CAD 900 million shortfall analysts had predicted in a Reuters poll. February marked the 18th consecutive monthly trade deficit, reflecting the continuing economic damage caused by low oil prices.
Exports, which hit a record high in January, fell 5.4 pct on lower shipments of consumer goods, energy products and motor vehicles and parts. Prices dropped by 3.2 pct while volumes declined by 2.2 pct. It was the largest month-on-month fall in exports since the 8.3 pct swoon seen in May 2009.
Imports decreased by 2.6 pct, pulled down by lower oil imports as refineries in eastern Canada sourced more of their crude oil domestically. Overall, import prices slipped by 1.4 pct while volumes shrank by 1.2 pct.
Exports to the United States, which accounted for 75.9 pct of Canada's global total in February, fell by 5.6 pct while imports dropped by 2.7 pct.
As a result, Canada's trade surplus with the United States slipped to C$2.68 billion from C$3.80 billion in January .On a volume basis, exports decreased 2.2 pct, while imports declined 1.2 pct. Moreover, prices for exports and imports fell in the month, 3.2 pct and 1.4 pct, respectively.


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