Loonie falls on Canadian political uncertainty

Fri Nov 28, 2008 9:01am EST
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"A lot of investors are rewarding governments that are showing strong leadership on the financial crisis and it looks like we're (Canada) going to be thrown into disarray."


Canadian bonds rose were mostly higher over fears of anemic U.S. holiday sales, which added to the financial worries and sent investors to safe-haven government debt.

"You're hearing a lot of talk about how dismal U.S. holiday sales are shaping up to be and there's a lot of focus on what will happen today, black Friday, in the U.S.," said Sal Guatieri, senior economist at BMO Capital Markets.

"Another report suggests that even with the most aggressive

discounting in decades, people could very well just stay home and keep their wallets shut."

The Canadian overnight Libor rate was 2.5000 percent, up from 2.4417 percent on Thursday.

The two-year bond was flat at C$102.02 to yield 1.717 percent. The 10-year bond gained 20 Canadian cents to C$107.45 to yield 3.328 percent.

The yield spread between the two-year and 10-year bond was 176 basis points, down from 177 at the previous close.

The 30-year bond climbed 40 Canadian cents to C$118.60 to yield 3.911 percent. In the United States, the 30-year Treasury yielded 3.496 percent.

(Reporting by John McCrank)