🚨 CANADA’S BOND MARKET IS SITTING ON A MASSIVE LEVERAGE BOMB.
Hedge funds now buy 40–50% of new Canadian government bonds, mostly using short-term borrowed money.
Asset manager repo borrowing has climbed to around $300 BILLION.
Even worse, just 5 hedge funds control nearly 70% of some major bond trades.
The Bank of Canada is now warning that if funding suddenly dries up, these funds could be forced to dump government bonds at the same time.
That could send Canadian yields and borrowing costs sharply higher.
Canada isn’t in a bond crisis yet, but the setup for one is getting dangerously bigger.
Hedge funds now buy 40–50% of new Canadian government bonds, mostly using short-term borrowed money.
Asset manager repo borrowing has climbed to around $300 BILLION.
Even worse, just 5 hedge funds control nearly 70% of some major bond trades.
The Bank of Canada is now warning that if funding suddenly dries up, these funds could be forced to dump government bonds at the same time.
That could send Canadian yields and borrowing costs sharply higher.
Canada isn’t in a bond crisis yet, but the setup for one is getting dangerously bigger.
