data releases in Canada

Both U.S. Treasurys and the Canadian government bond market retreated Friday morning after U.S. nonfarm payrolls data for February came in roughly consistent with expectations but were not as bad as many market participants feared.   Canadian bonds generally outperformed U.S. Treasurys Friday, though the long bond ended the session lagging its U.S. equivalent. Longer-dated issues were in positive territory for much of the session, but gains had been squeezed out of the market by late afternoon trading.   "The payroll [data] were the highlight of the day," said Edward Jong,  senior vice president for fixed income at MAK Allen & Day Capital Partners and portfolio manager for the FrontierALT Opportunistic bond fund.   The jobs report showed the U.S. continued to lose jobs, shedding 651,000 nonfarm jobs last month, while the jobless rate hit a 25-year high of 8.1%.   The U.S. economy has shed 4.4 million jobs since the recession began in December 2007, with almost half of those losses occurring in the last three months.   The data were something of a "nonevent" as they merely confirmed the continuing pattern of consistent monthly job losses in the U.S., Jong said.   "The reality is that this is one of many. We're in '09 now, and all of '08 was negative and all of '09 will be negative," he said.   Also hurting U.S. bonds were comments Friday from Federal Reserve Bank of New York President William Dudley, who votes on monetary policy. Dudley suggested buying long-term Treasurys isn't the best option for the Fed as the purchases now won't help the Fed's goal to bolster credit markets and the economy.   Overall, supply remains a critical issue for U.S. Treasurys and therefore for the Canadian market.   "The crosscurrents over last the few days have been fear of supply and fear of who's going to buy the debt issued by the Treasury," Jong said.   With continued volatility in stocks and corporate bonds, the environment remains generally favorable for government bonds, he said.   There were no significant data releases in Canada Friday.   The data calendar is light early next week, with February housing starts on Monday and the new-house-price index for January on Wednesday.