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April’s massive bond selloff didn’t stop Canadians from buying Treasuries, but it weighed heavily on the value of their holdings. Higher interest rates in the U.S., where the Federal Reserve has been much more patient to cut interest rates than other central banks, have likely spurred demand.
Canadians have been ditching all-things American after having enough of U.S. President Donald Trump’s threats about tariffs and making their country the “51st state.”
Boycotts of U.S. products from whiskey to dog food to Teslas—and a huge pullback in travel across the border—haven’t stopped Canadian investors from buying Uncle Sam’s debt, though. Trump’s chaotic tariff rollout in April marked the high point of the “Sell America” trade as stocks, bonds, and the dollar all sank. But despite the turmoil in fixed-income markets, Canadians purchased a net $9.2 billion of U.S. government bonds in April, the biggest monthly surge since November 2023.
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However, the value of Canada’s overall holdings fell by roughly $58 billion that same month, according to the most recent data from the Treasury, by far the biggest swing for any of the top 20 foreign owners of U.S. debt.
The drop likely reflects that month’s massive bond selloff, which may have forced Trump to back off on his so-called reciprocal tariffs. Long-term yields, which spike when bond prices fall, have remained stubbornly elevated with the Federal Reserve—unlike other central banks around the world—patient to cut interest rates.
“You’ve got this gap emerging with the Fed on hold and the Bank of Canada cutting rates, along with everyone else,” Rob Haworth, a senior vice president and investment strategist at U.S. Bank, told Fortune.
The Bank of Canada has slashed rates by 225 basis points over the past nine months, including 25-point cuts in January and March. The Fed, meanwhile, reduced rates by 100 points from September to December last year but has held rates steady so far in 2025.
As a result, the 10-year U.S. Treasury yield was 4.38% as markets closed on Friday, while Canada’s was at 3.30%.
Higher interest rates in the U.S. can make Treasuries appealing to Canadians and other foreign investors, Haworth said, provided they can effectively hedge the risk presented by a weakening U.S. dollar.
At the end of January, Canada’s private and public sector held a combined $351 billion worth of Treasury securities. That number surged to $426 billion at the end of March before falling to $368 billion in April, the most recent data available.
As Federal Reserve economists explained last year, this type of data has long been used as a gauge of foreign demand for Treasuries, particularly among the top three holders: Japan, the U.K., and China. The example of Canada, the seventh-largest owner of U.S. debt, illustrates why this approach is shortsighted, however.
