Canada has suspended trade negotiations with the United States, Prime Minister Mark Carney said, after last-minute changes to Washington’s proposed terms were deemed “unfair” and “uneconomic”, a day after US President Donald Trump had said that US "should be able to have a deal with Canada."
Canada owns near to half a trillion dollars in US bonds. Wonder what would happen if that was sold all at once?
We just saw the US bail out Japan (which owns about 1.2 trillion) to avoid Japan selling those bonds to bail themselves out. Really stupid of them to do that and then the next week play hard ball on another country that owns sizable chunk of US debt.
Canada would take a massive loss on the sale while the private markets and the Federal Reserve casually absorbs the influx of new notes at a discount.
It would definitely be dumb to let them go all at once. You’d want to dovest carefully. Or do some bond swaps, perhaps. Exchange some for euros or yuan.
I’m not talking about US dollars, I’m talking about bonds.