Canadian bonds rise modestly following weak oil prices; Poloz’s speech in focus

The Canadian government bonds traded modestly firmer Monday as crude oil prices declined more than two percent after Iran commented that it wants exemption from any agreement by the OPEC to cut production to prop up the market.

The yield on the benchmark 10-year bond, which moves inversely to its price, fell 1 basis point to 1.118 percent, the yield on long-term 30-year note dipped 1/2 basis point to 1.790 percent and the yield on short-term 2-year bond slid 1/2 basis point to 0.517 percent by 12:30 GMT.

The Iraqi oil minister Jabar Ali al-Luaibi said Baghdad wants to be exempt from any production cut the Organization of the Petroleum Exporting Countries is aiming to achieve. Falah al-Amiri, head of Iraqi state oil marketer SOMO, added that Iraq's market share had been compromised by the wars it has fought since the 1980s, Reuters reported.

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 International benchmark Brent futures fell 0.77 percent to $51.38 and West Texas Intermediate (WTI) dipped 1.38 percent to $50.15 by 12:30 GMT.

Investors will remain keen to focus on the upcoming Bank of Canada Governor Stephen Poloz speech scheduled to take place on October 24 at 19:30 GMT.

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

The S&P/TSX Composite Index rose 0.61 percent at the close of the trading session to 14,939.04 on Friday.