Menu

Search

  |   Commentary

Menu

  |   Commentary

Search

Canadian bonds gain following sluggish US Q2 economic growth

The Canadian bonds gained Friday after data showed that the world largest economy grew lower than the market expectations in the second quarter of 2016 and the GDP growth remained a bit more sluggish than previously anticipated.

The yield on the benchmark 10-year bond, which moves inversely to its price, fell more than 1 basis point to 1.054 percent and the yield on the short-term 2-year bonds dipped nearly 1 basis point to 0.584 percent by 13:10 GMT.

However, markets look to be holding steady in advance of Fed Chair Yellen’s Jackson Hole speech on Friday.

The preliminary gross domestic product (GDP) increased 1.1 percent in the second quarter of 2016, well below market expectations for a +1.2 percent result, from the revised +0.8 percent reading seen in first quarter of 2016 (previous was +1.1 percent).

Moreover, 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 Japan's target. The crude oil prices declined as US stockpiles increased by 6.6 million barrels in the week ended August 19 to a record high of 1.4 billion barrels, said the Energy Information Administration.

Also, Iraq prepared to increase its exports and renewed concerns that upcoming producer talks will not rein in oversupply. Also, worries about expanding Chinese fuel exports dragged oil prices. The International benchmark Brent futures fell 0.10 percent to $49.00 and West Texas Intermediate (WTI) dipped 0.04 percent to $46.75 by 13:10 GMT.

Lastly, Canadian stocks may struggle to continue its winning track Thursday morning amid sluggish commodities.

The S&P/TSX Composite Index rose 0.03 percent at the close of the trading session to 14,630.72 on Thursday.

  • Market Data
Close

Welcome to EconoTimes

Sign up for daily updates for the most important
stories unfolding in the global economy.