Canadian bonds flat in subdued trade; likely to fall as crude hits highest since June

The Canadian government bonds traded nearly flat Wednesday as investors await September employment data. Also, bond prices are likely to fall as crude oil prices rose to the highest since June.

The yield on the benchmark 10-year bond, which moves inversely to its price, hovered around 1.06 percent mark, the yield on long-term 30-year note remained steady at 1.73 percent and the yield on short-term 2-year bond stood flat at 0.55 percent by 12:40 GMT.

The Canadian bonds have been closely following developments in oil markets because of their impact on inflation expectations, which are well below the Bank of Canada's target. Crude oil prices bounced above $50 a barrel after a report that U.S. fuel inventories may have fallen for a fifth straight week. The International benchmark Brent futures rose 1.83 percent to $51.80 and West Texas Intermediate (WTI) also jumped 1.91 percent to $49.62 at 12:40 GMT.

Lastly, Canadian stocks are set to open a stronger session on Wednesday, as rebounding oil prices could drive gains in the energy sector.

The S&P/TSX Composite Index fell 1.14 percent at the close of the trading session to 14,520.92 on Tuesday.