Canadian bonds continue to rally as oil hovers around three-month low; GDP data eyed

The Canadian government bonds continued to rally on Wednesday as crude prices remained at a three-months amid Bearish Fundamentals.

The yield on the benchmark 10-year bond which moves inversely to its price fell 2-1/2 basis points to 1.098 percent and the yield on short-term 2-year note dipped 1/2 basis point to 0.590 percent by 13:30 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.

The crude oil prices hit its lowest since May following sluggish global demand and supply glut concerns. The International benchmark Brent futures fell 0.31 percent to $45.09 and West Texas Intermediate (WTI) tumbled 0.56 percent to $42.68 by 13:00 GMT.

Moreover, investors will remain keen to focus on the May gross domestic product (GDP) data, which is scheduled to released on Friday at 12:30 GMT.

Lastly, Canadian stocks may struggle to continue its winning track Wednesday morning amid sluggish commodities.

The S&P/TSX Composite Index rose 0.36 percent at the close of the trading session to 14,550 on Tuesday.