Canadians have been abandoning Americans after having enough US President Donald Trump threaten About tariffs and making your country a “51Yingshi state. ”
Boycotts the U.S. products from whiskey to dog food to dog food Tesla– Huge callback travel However, the entire border has not stopped Canadian investors from buying Uncle Sam’s debt. Trump’s chaotic tariff launch in April marks “For Sale in the United StatesStocks, bonds and the dollar all sunk. turmoil In the fixed income market, Canadians bought $9.2 billion in U.S. government bonds in April, a monthly increase since November 2023.
However, according to the latest data From the Treasury Department to the biggest swing to date, anyone among the top 20 U.S. debt owners.
The decline may reflect the huge bonds that month Sellthere may be force Trump backed off what he called reciprocity tariffs. Long-term yields that soar as bond prices fall still exist Stubbornly lifted With the Fed (not related to other central banks around the world), interest rates can be lowered.
“You already have the Fed gap on hold Canadian banks cut rates and everyone else. “Rober, Senior Vice President and Investment Strategist at Bank of America wealth.
Over the past nine months, Canadian banks have cut interest rates by 225 basis points, including 25 points in January and March. Meanwhile, the Fed lowered interest rates by 100 points from September to December last year, but so far, interest rates remain stable in 2025.
As a result, the U.S. Treasury’s 10-year yield was 4.38% as the market closed on Friday, while Canada’s 3.30%.
Haworth said higher U.S. interest rates could make Treasury bonds attractive to Canadians and other foreign investors as long as they can effectively hedge a weak Dollar.
At the end of January, Canada’s private and public sectors held $351 billion in fiscal securities. The figure soared to $426 billion at the end of March before falling to $368 billion in April, the latest figure.
As a Federal Reserve economist Explained Last year, this type of data has long been used as foreign demand for treasury, especially among the top three holders: Japan, the United Kingdom and China. The example of Canada, the seventh largest owner of U.S. debt, illustrates why this approach is shortsighted.
After all, Canadian investors bought more treasury in April, even after re-statement of the bonds at current market prices, the total value of their holdings fell. The sharp decline shows that northern neighbors in the United States have been exposed to long-term Treasury notes and bonds, which is more turbulent than short-term fiscal bills.
“Value changes usually move in the opposite direction of U.S. net sales/buys and are often large enough to drive overall changes in holdings,” Fed economists wrote last year. “So, the change in holdings is an unreliable measure of cross-border demand for us or foreign securities.”
Will foreign demand be dry?
Foreign investors account for about 30% of the U.S. fiscal market. according to For Apollo chief economist Torsten Sløk, Trump administration pushes A big change in the fields of global trade and international finance.
Since the dollar’s status is the global reserve currency, the United States’ excuses for rent is much better than its basic financial rent and has confidence that the United States will always pay the bill.
But if foreign buyers feel sore about U.S. Treasury bonds, this could force the Treasury to pay higher yields to bring back the buyers. Such a move will be proposed Upward pressure On interest rates across the economy, on small business loans, and other common borrowing types.
Foreign investors held more than $9 trillion in government bonds worth at the end of April, down slightly from the March record. Haworth said the dollar’s decline this year is much more obvious than any unloading of Treasury bonds.
He added that this makes sense because a slowdown in trade will affect the dollar flow in the first place because there are fewer green trading volumes. Changes in the allocation of treasury in the form of investment or bank reserves usually occur more slowly.
“When we address where trade and tariffs end up, there may still be some fundamental pressure,” he said.
Treasury data for April showed foreign private investors were net sellers of long-term U.S. debt. Government agencies such as central banks and sovereign wealth funds are net buyers.
However, more data suggest that the latter trend may reverse in the following months. These official entities hold shares in the New York Federal Reserve’s detention It has dropped $48 billion since late March, prompting Bank of America Credit strategists suggest that these investors’ needs “crack” can now be seen.
However, it seems that foreigners have not dumped U.S. debt. Even angry Canadians.
