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Bank of Canada Already Pushing Limits of Domestic Bond Market

  • New government bonds make up growing share of asset purchases
  • Opposition warning Macklem off financing Trudeau’s spending
Tiff Macklem puts on a protective mask after an Ottawa new conference in July.
Tiff Macklem puts on a protective mask after an Ottawa new conference in July.Photographer: Adrian Wyld/Canadian Press/Bloomberg
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Canada’s central bank is increasingly buying newly-issued government bonds that pay for pandemic spending, potentially stoking controversy over the extent of its budget deficit financing.

Market operation data from the Bank of Canada show benchmark bonds -- those currently being sold by the government, as opposed to older debt -- are making up a growing share of the central bank’s secondary market purchases.