Today, Canada’s 10-year bond yield stands around 100 basis points lower than the US’, creating a borrowing-cost advantage. This was not always the case: in previous decades when inflation ran higher in Canada than in the United States, and both countries took on significant debt, Canada’s 10-year bond yield was, on average, 104 basis points above the US equivalent. Since 2015, inflation in Canada and the US has remained broadly aligned, but net-debt in the US has climbed to over 90 percent of GDP, reducing and eventually reversing the large gap in the 10-year bond yields that has characterized previous decades.
To learn more about why Canada should solidify its advantage on interest costs by further reducing its debt burden and renewing the inflation targeting agreement between the Bank of Canada and the Government of Canada, read: https://cdhowe.org/publication/keeping-our-edge-the-benefits-of-sound-monetary-and-fiscal-policy/
