Canadian Bonds Higher as Investors Shift to Safe Havens

       By Don Curren 

    TORONTO--Canadian bonds are higher Friday morning as investors trim riskier assets from their portfolios and move into safe havens while the budget impasse in the U.S. continues.

    Canada's two-year bond yield is at 1.208% Friday, from 1.221% Thursday, according to electronic trading platform CanDeal. The 10-year bond yielded 2.550%, down from 2.588%.

    In the absence of first-tier economic data or other domestic drivers, the Canadian market was left to take direction from developments in the U.S.

    Lawmakers there need to clinch a fiscal deal by Monday to avoid the risk of a government shutdown. In addition, the U.S. Treasury is set to bump up against its $16.7 trillion borrowing limit around mid-October, unless legislators move to raise the debt ceiling.

    Bond markets also are being supported by month- and quarter-end flows.

    In domestic data, Statistics Canada said its employer survey indicated that Canada gained about 60,000 jobs in July.

    That number contrasts dramatically with the loss of 39,000 jobs in that month indicated in the more closely followed labor-force survey, which was released in early August.

    Economists say looking at both data series on a longer-term basis is the best way to get an accurate read on what is happening the country's labor market.

    National Bank Financial was attaching more credence to the employer survey Friday morning, saying in a report that, given the soft economy and the employer survey's relative stability, it may be "the more coherent one.

    Write to Don Curren at