Canadian bonds surge following soggy energy prices; TSX to open weak

The Canadian bonds surged Monday as investors poured into safe-haven assets on the back of weakness in global energy prices.

The yield on the benchmark 10-year bond, which moves inversely to its price, plunged nearly 5 basis points to 1.68 percent, the yield on long-term 30-year Treasury fell more than 3 basis points to 2.28 percent and the yield on short-term 2-year bond slid more than 1-1/2 basis points to 0.74 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 prices fell on increased exports by Iran, coupled with a higher U.S. oil rig count. The International benchmark Brent futures slid 1.94 percent to USD56.01 and West Texas Intermediate (WTI) fell 1.91 percent to USD52.96 by 12:30 GMT.

Lastly, Canadian stocks may struggle to recover its winning track Monday morning amid sluggish commodities.

The S&P/TSX Composite Index fell 0.58 percent to 15,496.05 at the close of the trading session on Friday, while at 12:00GMT, the FxWirePro's Hourly CAD Strength Index remained neutral at 45.96 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex