08:07 AM EDT, 05/29/2025 (MT Newswires) -- Rosenberg Research said it has been inundated of late on what is happening in Canada to have triggered such a rally in the past few months.

The answer is nothing or at least nothing that is good, noted Rosenberg Research. The Canadian dollar (CAD or loonie) is actually one of the weakest global currencies of the year -- just not as weak as the US dollar, which has been beset by a sharp loss in policy confidence.

On a trade-weighted, excluding US dollar basis, the loonie is still on a downward slope, pointed out Rosenberg.

Politically, Canadians chose the same "inept" party on all things economic but with a fresh face to govern the country in April's parliamentary party, added Rosenberg. Economically, Canada has near-stall-speed growth and, more recently, it has been coupled with net job loss and a further rise in the unemployment rate.

Financially, the Bank of Nova Scotia tjis week reported its Q2 results, and everything was fine except for this "nasty development" called rising consumer loan delinquency risks as the bank felt compelled to set aside C$1.4 billion loss of reserve provisioning -- versus C$1 billion a year earlier and far above expectations -- and, "amazingly," 25% of that came from credit that is still current, which is up nearly 4 times from Q1.

Now, what does that tell you about the state of the Canadian consumer, asked Rosenberg. A sector of the economy beset by a punishingly high 160% debt-to-income ratio and an over 14% debt service-to-earnings ratio -- a level that in the past presaged recessions.

The average effective interest rate in the household sector is 5.6% or nearly 4.0% in real terms. It was last this high in June 2009, by way of a reference point. And here the country had the Bank of Canada like the proverbial deer in the tariff headlights as it moved to the sidelines at the last policy meeting, it added.

Personal bankruptcies are on an uptrend -- rising more than 6% from year-ago levels at the current time. Equifax data show that the severe delinquency rate for non-mortgage credit (90 days or more in arrears) has climbed to 1.6%, which may seem benign but is actually the highest since 2010 when the economy was crawling out of the devastation from the Global Financial Crisis.

Canadians under the age of 35 are also paying a smaller share of their outstanding credit card balance as well -- the dollar amount of payments made on schedule is down 6.3% from a year ago.