Canadian bonds sag following recovery in energy prices; GDP data, Poloz’s speech in focus

The Canadian government bonds slumped Tuesday after crude oil prices recovered from previous losses on fresh buying. Also, investors await the gross domestic product (GDP) data and Bank of Canada (BoC) Governor Stephen Poloz’s speech, in an attempt to estimate the BoC's most likely policy step.

The yield on the benchmark 10-year bond, which moves inversely to its price, rose 2-1/2 basis points to 1.222 percent, the yield on long-term 30-year note also climbed 2 basis points to 1.867 percent and the yield on short-term 2-year bond bounced 1/2 basis point to 0.558 percent by 11:30 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 rose on fresh investors buying after crude oil prices fell below $50 mark. The International benchmark Brent futures rose 0.56 percent to $48.88 and West Texas Intermediate (WTI) climbed 0.21 percent to $46.96 by 11:00 GMT.

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

The S&P/TSX Composite Index rose 0.01 percent at the close of the trading session to 14,787.40 on Monday.