The Canadian economy rebounded sharply from the initial damage of the trade war as the country’s growth drivers shifted to housing and government spending.

Canada’s gross domestic product rose at a 2.6% annualized pace in the third quarter, Statistics Canada reported Friday from Ottawa. That’s the fastest pace of growth since the end of last year, and more than offsets a 1.8% decline in the second quarter that was driven by a major drop in goods exports.

The Bank of Canada and a Bloomberg survey of economists forecast a 0.5% quarterly increase.

Government of Canada bond yields rose across the curve, with two-year yields up about three basis points to 2.430% as of 8:50 a.m. in Ottawa. The loonie extended its advance to trade at a session high of C$1.3992 per U.S. dollar. Traders continue

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