Canadian bonds trade modestly lower on firm crude oil prices; investors eye Q2 GDP

The Canadian government bonds traded modestly lower Tuesday as the crude oil prices bounced after the production activity suspended in the US Gulf due to an expected tropical storm.

The yield on the benchmark 10-year bond rose 1 basis point to 1.037 percent, the yield on long-term 30-year note also bounced nearly 1 basis point to 1.663 percent and the yield on short-term 2-year bond climbed 1/2 basis point to 0.592 percent by 13:10 GMT.

Moreover, 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.

Also, the crude oil prices rebound as the US dollar backed off a two-week high hit the day before. The International benchmark Brent futures rose 0.55 percent to $49.72 and West Texas Intermediate (WTI) jumped 0.68 percent to $47.30 by 13:10 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 are set to open a stronger session on Wednesday, as rebounding oil prices could drive gains in the energy sector.

The S&P/TSX Composite Index rose 0.29 percent at the close of the trading session to 14,682.01 on Monday.