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Financial markets

Canadian Bond Prices Rise Amid Foreign Buying

Strategic Insights

— 2 min read

Canadian bond prices rose across the board, with gains ranging from 25 cents to 65 cents, due to increased foreign buying in relatively thin trading. The buoyant bond market, sparked by Wednesday's successful Canada 10-year bond issue, is attributed to foreign traders' enthusiasm for new issues, according to Mario Angastiniotis, senior economist at MMS International. However, he cautions that this spurt will be short-lived as foreign traders dump existing bonds. Provincial governments, such as Ontario and Nova Scotia, took advantage of the market's strong tone to issue new bonds, with Ontario re-opening its long-term issue maturing in 2022 and Nova Scotia issuing 35 billion Japanese yen of bonds maturing in 10 years.

Key Takeaways:

  • Canadian bond prices rose by 25 cents to 65 cents across the board, driven by foreign buying in relatively thin trading.
  • The Government of Canada 8-per-cent, 30-year bond, maturing in 2023, added 50 cents to $88.35 and saw its yield fall to 9.141 per cent from 9.20 per cent.
  • Provincial governments, including Ontario and Nova Scotia, issued new bonds, with Ontario's total outstanding for its long-term issue reaching $1.85 billion.
  • Analysts agreed that both provincial auctions were well received, with Ontario's reopening of its long-term issue maturing in 2022 seen as a positive development.
  • The U.S. bond market, however, saw prices decline across the curve, with the yield on the 6.25-per-cent, 30-year Treasury growing to 7.403 per cent.
  • Economists predict a 200,000 increase in non-farm payroll jobs in July, but other estimates range from growth of 150,000 to 250,000 jobs, affecting the U.S. yield curve.
  • Provincial issuances include Ontario's province-owned utility Hydro issues and Nova Scotia's 35 billion Japanese yen bond.

Statistics:

  • Canadian bond prices rose by 25 cents to 65 cents.
  • The Government of Canada 8-per-cent, 30-year bond added 50 cents to $88.35.
  • Ontario's total outstanding for its long-term issue reached $1.85 billion.
  • The U.S. yield on the 6.25-per-cent, 30-year Treasury grew to 7.403 per cent.
  • Economists predict a 200,000 increase in non-farm payroll jobs in July.
  • The U.S. bond market saw prices decline across the curve.

Sources:

  • RBC Dominion Securities
  • MMS International (Mario Angastiniotis)
  • Labor Department report
  • U.S. July employment report
  • Canadian bond market data
  • Provincial government issuances and auctions

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