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Canada bonds retreat as players pull out profits

TORONTO: Canadian government bonds fell across the curve on Friday after market players pulled out profits in favour of stocks.

The Toronto Stock Exchange's key 300 Composite Index rose 73.47 points to close at 9487.14 points on Friday.

The Canadian benchmark long bond, due 2027, dropped 66 Canadian cents to C$129.25 to yield 5.840 percent.

In the US, the 30-year T-bond lost 9/32 to yield 6.173 percent. The difference was a negative 33 basis points.

Andrew Pyle, senior economist at Scotiabank said that US markets in particular had run their upward course, in the short term. "It's difficult to justify a sustained rally in bonds," he added.

Players are anticipating that US Federal Reserve members might hike short-term interest rates yet again at their Federal Open Market Committee meeting on March 21.

"The Fed is going to tighten on March 21 by 25 basis points," Pyle predicted.

In other news, Canada's jobless rate, unleashed on Friday, matched expectations coming in flat at 6.8 percent in February despite healthy job growth, as the growing prospect of employment lured thousands back into the work force.

Economists said the overall report signalled a continuation of robust economic growth.

Bond investors will be watching next week's Canadian inflation figures for signals on whether Canada's central bank will follow in the Fed's tightening mode.

Canada's two-year bond on Friday lost three Canadian cents to C$98.77, for a yield of 6.009 percent.

In money markets, the three-month when-issued T-bill yielded 5.19, ticking up from a yield of 5.18 percent at Thursday's close close.-Reuters