Canadian bond prices surged higher in May, driving yields of longer term bonds to all-time lows. In part, the bond rally had been expected due to the anticipated index duration extensions that will occur in the first half of June. However, renewed concerns about European sovereign debt and about the strength of the U.S. economy, as well as weak equity markets, also caused a flight-to-safety bid for bonds. The broad DEX Universe Bond Index gained 2.11% in the period, while the DEX Long Term Bond Index jumped 4.09%.
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