Hub Podcasts What the bond market is saying about Canada's increasingly fast spending ways
Jul 15, 2025
Canada's rising debt and deficits spark concern among market watchers. There's a widening gap between optimistic fiscal narratives and harsh market realities. The podcast dissects how bond values in Canada are facing sharper declines than in the U.S., reflecting skepticism about fiscal sustainability. It navigates conflicts in government spending priorities, from tax cuts to defense, and the implications of inflation on ambitious plans. The conversation contrasts Canada's public debt management with that of the U.S., revealing unique challenges ahead.
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Market Wary of Canadian Debt
- Canadian long-term government debt values have fallen over 6% since early 2024.
- U.S. long-term debt values declined less than 3%, showing the market's growing wariness of Canadian debt.
Rising Canadian Borrowing Costs Explained
- Long-term Canadian bond rates reflect market concerns about fiscal sustainability and inflation.
- Rising Canadian borrowing costs show skepticism about the government's ability to honor future debt.
Changing Government Borrowing Reality
- Low borrowing costs justified past government debt when spent productively.
- Rising long-term interest rates now mean borrowing must show clear value for taxpayers.