Canadians have taken our debts despite Trump’s tariffs

Boycott of our products, from whiskey to dog food Teslas– and a big pullback trip But across the border, it didn’t stop Canadian investors from buying Uncle Sam’s debt. Trump’s chaotic tariff development in April wasSelling America“The trading as stocks, bonds and dollars all sunk. confusion In the bond market, Canadians purchased $9.2 billion in US government bonds in April. This is the largest monthly spike since November 2023.

However, according to the latest, Canada’s overall holdings value fell by about $58 billion that month. data The largest swing from the Treasury Department of the United States’ top 20 foreign owners.

The drop may reflect the massive bonds of the month salemaybe you have Forced Trump will retreat what is called mutual tariffs. Long-term yields remain that will surge as bond prices drop. Stubbornly raised Unlike other central banks around the world, patients cut interest rates because they have a Federal Reserve system.

“You’re seeing this gap appear in the Fed. Pending “We’re excited to be able to help you get the better of your business,” said Rob Howarth, Senior Vice President and Investment Strategist at US Bank. luck.

The Bank of Canada has cut 225 basis points over the past nine months, including a 25-point cut in January and March. Meanwhile, the Fed was cut by 100 points from September to December last year, but has remained stable so far in 2025.

As a result, the market closed on Friday, with Canada at 3.30%.

Higher US interest rates can make finances attractive to Canadians and other foreign investors, and provided that Howarth can effectively hedge the risks they present, Weakening USD.

At the end of January, Canada’s private and public sector held a total of $351 billion worth of Treasury securities. That number surged to $426 billion at the end of March and fell to $368 billion in April. This is the latest data.

As a Federal Reserve Economist I explained it Last year, this type of data has long been used as a measure of foreign demand for the Treasury, especially among the top three holders in Japan, the UK and China. The example of Canada, the seventh-largest owner of US debt, shows why this approach is myopic.

After all, Canadian investors bought even more finances in April despite the decline in the total value of their holdings after revaluing the bonds at current market prices. A big drop suggests that America’s northern neighbors are exposed to a large amount of long-term Treasury bills and bonds.

“The valuation changes are often large enough to move in the opposite direction of net sales/purchase in the US, and often to facilitate an overall change in the shares held,” the Fed economist wrote last year. “So, changing the holdings alone is an unreliable measure of cross-border demand for US or foreign securities.”

Will foreign demand be exhausted?

Foreign investors make up about 30% of the US Treasury market. According to Torten Slok, Chief Economist of Apollo, and their actions are closely monitored when the Trump administration promotes Big shift World trade and international finance.

The US is usually permitted at a far better rate than its underlying finances, thanks to the status of the dollar as a global reserve currency and the trust that America always pays bills.

However, if a foreign buyer is sour in the US Treasury, it could force the Treasury to pay a higher yield to bring the buyers back. Such a movement is placed Upward pressure On mortgages, small business loans, and other common types of interest rates for the economy-wide borrowing.

Foreign investors won a slightly more than $9 trillion in Treasury at the end of April, down slightly from the record set in March. Howarth said the dollar decline this year is much more pronounced than the Treasury offloading.

That makes sense, he added. This is because a slowdown in trade affects the flow of the dollar first, as greenback is used in fewer transactions. Changes in the Treasury allocation, often held as investments or bank reserves, occur much more slowly.

“There’s probably some fundamental pressure, as you’re missing out on where the trade and tariffs are,” he said.

Financial data for April shows that foreign private investors are net sellers of long-term US debt. Government agencies such as central banks and sovereign wealth funds were net buyers.

More current data suggest that the latter trend may have reversed in a few months. Holds by these official bodies under custody of the New York Federal Reserve System I declined $48 billion from late March, prompted Bank of America Credit strategists suggest that a “crack” in demand from these investors is visible now.

Still, it doesn’t seem that foreigners are still dumping US debt. Even angry Canadians.