Canadian bonds gain as crude oil prices fall below $50

The Canadian government bonds gained Monday as crude oil prices fell below $50 a barrel following news that Iraq will increase crude exports.

The yield on the benchmark 10-year bond fell 3 basis points to 1.046 percent, the yield on long-term 30-year note dipped 2-1/2 basis points to 1.662 percent and the yield on short-term 2-year bond slid 1-½ basis point to 0.560 percent by 12:50 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 declined more than 2 percent as Iraq prepared to increase its exports and renewed concerns that upcoming producer talks will not rein in oversupply. The International benchmark Brent futures fell 3.05 percent to $49.34 and West Texas Intermediate (WTI) dipped 2.21 percent to $47.45 by 12:50 GMT.

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

The S&P/TSX Composite Index fell 0.06 percent at the close of the trading session to 14,687.46 on Friday.