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Canadian bond prices fell slightly and yields rose marginally in August. However, the relatively small changes over the whole month belied the volatility that occurred within the period. The DEX Universe Bond index, for example, declined 0.10% in August, having been down as much as 1.35% mid-month before rallying back. Long term bonds experienced even greater volatility. The DEX Long Term Bond index fell 2.77% in the first half of the month, but rebounded to finish down only 0.49%. Price changes of more than 1% occurred on several days. A significant factor behind the volatility was reduced liquidity due to summer vacations. With many investors, both in Canada and abroad, taking time off, trading activity tended to move prices more than usual.
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