Canada's Bond Yields Rise Less Than Half as Much as US Counterpart

The recent surge in US bond yields has spilled over into global markets, but Canada's smaller increase reflects its strong credit rating and better fiscal position.

US growth expectations have remained robust, with excitement around AI and its potential to boost the economy. However, this hasn't justified the scale of the selloff in government bonds.

A more convincing explanation for the rise in US bond yields is a combination of mounting fiscal concerns, renewed inflationary risks, and uncertainty about monetary policy.

The US fiscal outlook remains bleak, with the Congressional Budget Office expecting a federal deficit to reach 5.8% of GDP in 2026 and remain exceptionally large over the coming decade.