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The Canadian bond market rebounded from losses early in the month to finish December with a small gain. Economic data in both Canada and the United States was stronger than expected, and that prompted some initial selling of bonds. The Canadian bond market was also impacted by a sharp selloff in the U.S. bond market following an agreement in that country to provide additional fiscal stimulus that would significantly increase the fiscal deficit. The subsequent rebound in bond prices came as bargain hunting by some investors led to out-sized price increases in illiquid yearend market conditions. The DEX Universe Bond index rose 0.16% in the month and 6.74% for all of 2010.
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