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

The Canadian government bonds slumped Thursday after crude oil prices recovered from previous losses post an attack on a Nigerian oil pipeline and were also supported by weaker U.S. dollar.

Investors await 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 1-1/2 basis points to 1.201 percent, the yield on long-term 30-year note climbed 2-1/2 basis points to 1.852 percent and the yield on short-term 2-year bond bounced nearly 1 basis point to 0.553 percent by 12:30 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 futures recovered after an attack on a Nigerian oil pipeline and were also supported by weaker U.S. dollar. The International benchmark Brent futures rose 0.85 percent to $47.26 and West Texas Intermediate (WTI) climbed 0.71 percent to $45.66 by 12:30 GMT.

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

The S&P/TSX Composite Index fell 1.24 percent at the close of the trading session to 14,595.11 on Wednesday.