In response to Statistics Canada, international buyers purchased $7.9 billion in Canadian securities, marking the best month-to-month bond funding since April 2020. On the identical time, Canadian buyers pulled again from international holdings, promoting off $3.2 billion, largely in U.S. equities.
The elevated urge for food for Canadian bonds in January is partly a response to U.S. tariffs and financial uncertainty, as commerce tensions have been escalating.
Buyers poured $33.5 billion into Canadian bonds, with greater than half of that going into U.S.-dollar-denominated debt. The most important beneficiaries have been provincial authorities bonds, which noticed a document $10.8 billion in international purchases, whereas company bonds additionally attracted $15.4 billion—probably the most since April 2022.
In the meantime, Canadian buyers have been offloading U.S. shares on the quickest tempo since March 2022, promoting $15.6 billion value in January alone. With U.S. markets going through elevated volatility and commerce tensions, many Canadians opted for international debt as an alternative, buying $14.4 billion in bonds, together with $6.7 billion in U.S. bonds and $8.4 billion from different international locations.
This shift in funding patterns resulted in a internet influx of $11.1 billion into the Canadian economic system. The Bank of Canada’s determination to chop its coverage price to three.0% probably performed a task in making Canadian bonds extra engaging, whereas the Canadian greenback’s 0.7% depreciation in opposition to the U.S. greenback added to the enchantment.
Apparently, regardless of a 3.3% rise within the S&P/TSX Composite Index, international buyers pulled again from Canadian shares, decreasing their holdings by $6.6 billion. This was primarily attributable to merger and acquisition-related retirements and secondary market gross sales, reinforcing the concept that buyers have been prioritizing safer, long-term debt over equities.
Overseas funding in Canadian bonds, by sector of issuer
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Final modified: March 18, 2025