Canadian Bonds Higher Ahead of BOC Rate Decision

 
   By David George-Cosh 
 

        TORONTO--Canadian bonds strengthened Tuesday as weaker U.S. economic data led interest in safer assets, as traders took positions ahead of the Bank of Canada's rate decision.
        Canada's two-year bond yield was at 0.457% Tuesday, down from 0.472% late Monday, according to electronic trading platform CanDeal. The 10-year bond yield was at 1.647%, down from 1.687%. Bond yields move inversely to prices.
        Canadian bonds moved in sympathy with their U.S. counterparts following a weak round of U.S. economic data. U.S. retail sales fell 0.3% in June, missing expectations of a 0.2% rise.
        U.S. import prices fell by a seasonally adjusted 0.1% in June from the prior month, below economist forecasts of a 0.1% monthly gain.
        Bonds will likely be volatile ahead of Wednesday's Bank of Canada rate announcement. The market currently has a 44% chance that the central bank will cut its policy rate by 25 basis points Wednesday.
        If the Bank of Canada cuts interest rates, two-year bonds should "break below their recent 2015 lows but that the overall move will be less extreme than in January," noted TD Securities. Five-year notes will likely underperform any market rally, the bank added.
        Write to David George-Cosh at david.george-cosh@wsj.com
        (END) Dow Jones Newswires

        July 14, 2015 16:17 ET (20:17 GMT)

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