By David George-Cosh
TORONTO-- Canadian government bonds are higher Thursday, as concerns about weakness in the U.S. economy and the absence of a constructive outcome out of the European Union summit led investors to pursue a flight to safer assets.
The 10-year bond was yielding 1.669% Thursday, from 1.725% late Wednesday, according to electronic bond trading platform CanDeal. Yields for Canada's two-year bond were at 0.950%, from 0.995% while the 30-year bond was yielding 2.287%, from 2.325%.
Bond yields move inversely to bond prices.
Canadian bonds outperformed their U.S. counterparts after U.S. economic data was "marginally disappointing," spooking investors who were also seeking positive developments out of the two-day European Union summit that began on Thursday, said David Tulk, chief Canada macro strategist at TD Securities in Toronto.
U.S. gross domestic product for the first quarter of 2012 came in at 1.9%, meeting expectations but still below target levels needed for a broad U.S. economic recovery. The number of U.S. workers filing weekly jobless claims fell by 6,000 to 386,000, a slightly steeper decline than expected but still raising doubts that job creation in the U.S. has recovered to healthy levels.
"The expectations going into (the summit) were pretty upbeat but some of those are being pared back as we realized that most of these issues are medium-term challenges," Mr. Tulk said. "In the eye of the market, there's more waiting to come and the balance of risk is still tilted to the downside."
Bond markets also rallied following the Supreme Court of the United States' decision to uphold President Barack Obama's health care overhaul on concerns that the move will result in increased government spending.
Write to David George-Cosh at david.george-cosh@dowjones.com
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June 28, 2012 11:40 ET (15:40 GMT)
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