The Canadian 10-year bond yield slid all time low on Wednesday as crude oil prices decline more than 5 percent below $50 a barrel. The yield on the benchmark 10-year bond which moves inversely to its price fell 3 basis points to 0.967 percent and the yield on the short-term 2-year bonds dipped 1 basis point to 0.483 percent by 13:00 GMT.
The Canada international merchandise trade report revealed a narrower net deficit of 3.28 billion of Canadian dollar (CAD) in May, above expectations for a CAD -2.70 billion result, as compared to the revised CAD -3.32 billion reading seen in April (previous was CAD -2.94 billion).
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. Today, crude oil prices edged lower, extending losses to a third straight session, as investors grew concerned over consumption due to weaker demand from refineries and potentially slower economic growth after Britain's decision to leave the EU.
Despite record demand from drivers across the United States, an excess of gasoline worldwide has weighed on refineries' profitability, leading some to cut runs and throwing the demand for crude oil in doubt. Investors also awaited data on U.S. crude inventories, delayed due to Monday's Independence Day holiday.
The International benchmark Brent futures fell 1.08 percent to $47.44 and West Texas Intermediate (WTI) dipped 0.86 percent to $46.20 by 13:00 GMT.
Lastly, Canadian stock futures indicated a lower start for Canada's main stock on Wednesday as investors turned risk-averse amid fears that Britain's impending exit from the European Union would slow global economic growth.
Weakness in oil prices for the third straight session also weighed on stocks. September futures on the S&P TSX index were down 0.52 percent at 12:00 GMT.
The material has been provided by InstaForex Company – www.instaforex.com