Americans invest heavily in Canadian bonds

Americans are increasingly investing in Canadian bonds despite political tensions. Recently, Donald Trump claimed that the U.S. "doesn’t need anything" from Canada. However, new data shows that foreign investors bought $33.5 billion in Canadian bonds in January, with Americans accounting for $20 billion of that total. Economists from the National Bank of Canada noted that this surge in investment happened even amidst threats of tariffs and economic uncertainty. They pointed out that this was the second-largest net foreign buying of Canadian bonds on record, only behind a similar surge in April 2020. This appetite for Canadian bonds is important as Canada may face financial challenges due to recession fears and government budget needs. If tariffs are imposed, provinces could see higher borrowing requirements to support businesses and citizens. The trend suggests that provincial debt issuance could reach record levels. Canada's strong credit ratings make it an attractive option for investors. The country has held the highest ratings from major agencies and has lower debt in relation to its economy compared to the U.S. Investors generally view Canada's creditworthiness positively, even with potential economic strain. The growing reliance on foreign investors is significant for Canada. After issuing nearly $200 billion in bonds to foreign investors in 2024, about 40% of Canada's national bonds are now held outside the country. Economists warn that this is a crucial export Canada cannot overlook. Meanwhile, home sales in Canada fell by almost 10% in February, reflecting economic impacts of the current political climate. A roundtable is planned at the U.S.-Canada border to discuss trade issues between U.S. Senator Peter Welch and local business leaders.