Canadian bonds down following firm crude oil prices, eye on EU referendum results

The Canadian government bonds slid on Thursday as investors were guardedly optimistic about a "Remain" vote in Britain's make-or-break European Union referendum. Also, firm crude oil prices drove-out investors from safe-haven buying.

The yield on the benchmark 10-year Treasury note which moves inversely to its price rose more than 8-1/2 basis points to 1.317 percent and the yield on the short-term 2-year bonds also jumped 4 basis points to 0.635 percent by 13:00 GMT.

The final UK poll by Ipsos Mori for the Evening Standard shows 52 percent favouring Remain and 48 percent Leave. This will encourage optimism that Brexit will be averted when today's votes are counted.

Referendum voting has officially begun in the United Kingdom at 6:00 GMT. Voting will continue for next 15 hours and will end at 21:00 GMT with the result likely known around this time tomorrow (between 06:00 to 07:00 GMT). The market is not likely to move much throughout this period, however, there could occasional volatility spark due to low volume and position shifting.

The recent polls showed the outcome of the referendum is too close to call, raising the uncertainty about the Thursday outcome. Latest online poll by YouGov showed 51 percent has voted in favour of 'Bremain', while remaining 49 percent voted for a 'Brexit'. Also, poll by the YouGov, 35 percent say its 'risky' to stay in the European Union, while 53 percent say it is 'safe' to stay in the EU.

Another UK phone poll by ComRes indicated 48 percent Britons voted to 'Remain' in the European Union, while 42 percent voted for 'Leave'; rest remained undecided.

Interestingly, according to Betfair the probability of the Remain camp winning in today's UK referendum has increased by 78 percent, according to response from the latest campaign polls.

On Friday, the Canada CPI report revealed a +0.4 percent m/m (+1.5 percent y/y) reading for May, just below market expectations for a +0.5 percent m/m (+1.6 percent y/y) reading, as compared to the unrevised +0.3 percent m/m (+1.7 percent y/y) result seen in April. Meanwhile, the BoC core measure increased +0.3 percent m/m (+2.1 percent y/y) in May, versus the unrevised +0.2 percent m/m (+2.2 percent y/y) reading seen in March, in line with market expectations for a +0.2 percent m/m (+2.2 percent y/y) result.

Lastly, Canada’s benchmark stock index edged slightly lower on Wednesday, with energy stocks weighing as oil fell with a smaller-than-expected U.S. inventory drawdown and gold miners rose a day before Britain votes on its future in the European Union. The Toronto Stock Exchange’s S&P/TSX composite index touched a one-week high during the session, but slipped back after the U.S. Energy Information Administration (EIA) data.