Canadian bonds climb as crude oil prices falls to $48 on economic concerns, ample supply

The Canadian government bonds climbed on Tuesday as crude oil prices fell below $50 a barrel as concern about a potential slowdown in economic growth that would weigh on demand trumped supply outages in Nigeria and other exporting nations.

The yield on the benchmark 10-year bond which moves inversely to its price fell 3 basis points to 1.016 percent and the yield on the short-term 2-year bonds dipped 1-1/2 basis points to 0.502 percent by 13:00 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. Today, oil fell below $50 a barrel, pressured by higher Nigerian output and concern about the economic outlook following Britain's vote to leave the European Union last week. The International benchmark Brent futures fell 2.59 percent to $48.78 and West Texas Intermediate (WTI) dipped 3 percent to $47.52 by 13:00 GMT.

Lastly, Stock futures pointed to a lower opening for Canada's main stock index on Tuesday as concerns about a potential slowdown in economic growth weighed on investor sentiment.

September futures on the S&P TSX index were down 0.12 percent at 13:00 GMT. The Toronto Stock Exchange's S&P/TSX composite index, powered by mining stocks, rallied to a nearly four-week high on Monday, as gold and silver climbed, while financial and energy stocks also advanced.