Canadian Bonds Up Ahead of Canada May GDP Report

 
   


By David George-Cosh 
 

        TORONTO--Canadian bonds advanced Thursday on month-end rebalancing and weaker-than-expected U.S. economic data.
        Canada's two-year bond yield was at 0.456% Thursday, up from 0.465% late Wednesday, according to electronic trading platform CanDeal. The 10-year bond yield was at 1.500%, up from 1.528%. Bond yields move inversely to prices.
        With no domestic releases to drive the Canadian bond market, fixed-income assets took cues from south of the border.
        U.S. and Canadian government bonds soared after U.S. second-quarter gross domestic product rose by a 2.3% seasonally adjusted annual rate. Economists expected U.S. GDP to increase 2.7% in the second quarter.
        "The average growth rate in the first half of the year and the year-over-year pace of expansion are both consistent with a moderate pace of growth which the [Federal Reserve] appears comfortable with," said Andrew Grantham, economist with CIBC World Markets.
        He reiterated that September is the most opportune time for the Fed to start raising interest rates, while today's GDP figures didn't shift that judgment.
        Portfolio managers also took the opportunity to move into bonds to rebalance funds at the end of July.
        Bonds will likely react to Friday's Canada GDP for May report, noted TD Securities. Economists expect no month-over-month change, a sign that Canada may be in the midst of a recession, and should leave the front-end of the curve well bid, the bank noted.
        Write to David George-Cosh at david.george-cosh@wsj.com
        (END) Dow Jones Newswires
        July 30, 2015 15:45 ET (19:45 GMT)

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