Staff analytical notes

We examine the Canadian money market fund (MMF) sector and find that it has grown rapidly, holding a large share of treasury bills and commercial paper. Unlike in some other jurisdictions where investor outflows likely amplified stresses, Canadian MMFs experienced inflows during the March 2020 market turmoil.

The BoC–BoE database of sovereign debt defaults, published and updated annually by the Bank of Canada and the Bank of England, provides comprehensive estimates of stocks of government obligations in default. The 2025 edition highlights a decline in the US-dollar value of sovereign debt in default and provides more data about defaults on China’s official loans.

Household savings in Canada have increased significantly since 2019, especially among homeowners without a mortgage. We assess how savings buffers can mitigate households’ financial risk in relation to asset repricing, mortgage payment renewal and unemployment.

We find that the rise in Government of Canada debt issuance correlates to growing participation of hedge funds in bond auctions since 2020. This increased participation supports the cost-effective distribution of Canada’s debt, but it also represents a potential vulnerability because hedge funds have a greater flight risk than other investor types.

We update an assessment of potential changes in payments that mortgage holders could face at renewal in 2025 and 2026. We use an enhanced dataset (RESL2) that provides a more accurate starting point for mortgage balances.

Trading flows affect Government of Canada bond prices. Our estimates suggest a sale of 1% of the available supply of bonds typically lowers bond prices by 0.2%. From 2000 to 2025, demand from institutional investors, such as Canadian pension funds and foreign investors, explains 69% of quarterly price variation, with the remainder explained by changes in the supply of bonds.

We share insights about non-bank financial intermediation in Canada in 2023. These data were collected as part of the Bank of Canada’s contribution to the Financial Stability Board’s Global Monitoring Report on Non-Bank Financial Intermediation.

US trade protectionism is making the economic outlook increasingly uncertain. To assess how consumer prices may respond to tariffs, we examine a tariff episode from 2018 using detailed microdata and the synthetic control method.

We provide an update on the state of the labour market, which has moved into modest excess supply. We also explore why wage growth measures remain elevated and how US trade policy could affect different parts of the labour market. We update the range of benchmarks in our dashboard of indicators.

We assess both the US and Canadian nominal neutral rates to be in the range of 2.25% to 3.25%, unchanged from the range assessed in 2024.