Canadian bonds plunge on higher wholesale trade; weak oil limits growth of yield

The Canadian government bonds plunged on Thursday after reading higher-than-expected May wholesale trade data. On the contrary, weak crude oil prices limited the growth in bond yields.

The yield on the benchmark 10-year bond which moves inversely to its price rose more than 2 basis points to 1.147 percent and the yield on short-term 2-year note also jumped 1 basis point to 0.615 percent by 13:00 GMT.

Canada’s May wholesale trade jumped 1.8 percent m/m, higher than the market consensus of 0.2 percent m/m, as compared to 0.1 percent growth in April.

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.The International benchmark Brent futures fell 0.47 percent to $46.95 and West Texas Intermediate (WTI) tumbled 0.07 percent to $45.72 by 13:00 GMT.

Lastly, Canadian stock futures indicated a lower start for Canada's main stock as traders weighed mixed corporate earnings results.

The S&P/TSX Composite Index rose 0.06 percent at the close of the trading session to 14,533.57 on Wednesday.