No evidence hedge funds drove Government of Canada bond illiquidity at the start of the 2026 Middle East war, Bank of Canada researchers find

A Bank of Canada paper asks whether hedge funds contributed to illiquidity in the Government of Canada bond market at the onset of the Middle East war in early 2026. The researchers report they found no evidence that they did.

The supporting detail is about behavior rather than intentions: hedge funds remained active in primary auctions, and their secondary market trading stayed broadly consistent with their usual relative-value strategies. That is a specific finding about a specific market window, not a general verdict on hedge fund risk-taking.