Since the end of 2023, foreign investors have increased their holdings of Government of Canada bonds by 67 percent compared to 18 percent for US Treasuries. Meanwhile, Canadian investors have cut their holdings of US government bonds by 28 percent since July 2025 but continue to buy US equities, demonstrating concern about Washington’s debt levels, but not US companies. This creates an advantage for Canada’s 10-year bond yield, which can help avoid rushing into trade concessions. But this advantage is not guaranteed, and Canada should protect itself by keeping tariff relief temporary, and targeted, and setting out a credible path to lower its debt ratios.
For more see this recent C.D. Howe Intelligence Memo.
