Canadian bonds gain following weak crude oil prices; Q2 GDP in focus

The Canadian government bonds gained Monday as crude oil prices declined more than 1 percent at the start of the week as Iran said it would only cooperate in talks to freeze output if other exporters recognized its right to full regain market share.

The yield on the benchmark 10-year bond fell 2-1/2 basis points to 1.069 percent, the yield on long-term 30-year note dipped 1-1/2 basis points to 1.672 percent and the yield on short-term 2-year bond slid 1 basis point to 0.597 percent by 12:50 GMT.

The Canadian bonds have been closely following developments in oil markets because of their impact on inflation expectations. The data showed that Iraq is producing 3.205 million barrel per day in August compared to 3.202 million barrel per day in July. The International benchmark Brent futures fell 1.34 percent to $49.48 and West Texas Intermediate (WTI) dipped 1.26 percent to $47.04 by 09:00 GMT.

Moreover, investors will remain keen to focus on the upcoming economic data, highlighted by Q2 GDP, manufacturing PMI and trade balance.

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 14,639.88 on Friday.