Canadian bonds surge following weakness in energy prices

The Canadian bonds snapped fall at the start of the week, following weakness in global crude oil prices as speculations of a rise in output in the United States offset the news that OPEC and non-OPEC producers were on track to meet output reduction goals set in December. Canada is the world’s 7th largest oil producing country.

The yield on the benchmark 10-year bond, which moves inversely to its price, plunged 2 basis points to 1.73 percent, the yield on long-term 30-year Treasury also moved 1-1/2 basis points lower to 2.36 percent and the yield on short-term 2-year bond slid 1 basis point to 0.76 percent by 12:30 GMT.

The International benchmark Brent futures fell 0.97 percent to USD54.95 and West Texas Intermediate (WTI) also dived 1.30 percent to USD52.53 by 12:40 GMT.

Ministers representing members of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers said at a meeting on Sunday that of almost 1.8 million barrels per day (bpd) they had agreed to be taken out of the market, 1.5 million bpd had already gone.

However, U.S. drillers added most rigs in nearly four years last week, data from energy services firm Baker Hughes showed on Friday. This extended an 8-month drilling recovery and is supporting signs that the U.S. production will continue to rise strongly just as other producers are cutting output.

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

Meanwhile, the S&P/TSX Composite Index rose 0.90 percent to 15,547.88 at the close of the trading session on Friday, while at 12:00GMT, the FxWirePro's Hourly CAD Strength Index remained slightly bearish at -95.84 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex