Canadian bonds rise modestly ahead of BoC monetary policy decision

The Canadian government bonds rise modestly Monday as investors remained cautious ahead of the bank of Canada monetary policy meeting, which is scheduled to be released on October 19.

The yield on the benchmark 10-year bond, which moves inversely to its price, fell 1-1/2 basis points to 1.234 percent, the yield on long-term 30-year note dipped nearly 1 basis point to 1.86 percent and the yield on short-term 2-year bond also slid 1 basis point to 0.609 percent by 12:50 GMT.

The Bank of Canada (BOC) meets on Wednesday and will announce if there is any change in monetary policy. Bank of Canada Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins are scheduled to hold a press conference following the bank's interest rate decision and release of its monetary policy report. We foresee that the BoC will leave its benchmark interest rates on hold.

According to Reuters, crude oil prices reversed losses on Monday on expectations of an OPEC intervention next month to curb production, but a rising rig count in the United States capped gains. The International benchmark Brent crude oil futures rose 23 cents to $52.18 per barrel at 11:51 GMT (0751 EDT), after falling to as low as $51.56 a barrel earlier.

The U.S. West Texas Intermediate (WTI) crude oil futures were trading at $50.46 per barrel, up 11 cents from their last settlement, after hitting a session low of $49.94 a barrel.

Lastly, Canadian stocks are set to open a stronger session on Monday, as rallying oil prices could drive gains in the energy sector.

The S&P/TSX Composite Index fell 0.40 percent at the close of the trading session to 14,584.99 on Friday.