The Financial Post reports in its Saturday edition that investors are questioning the Federal Reserve's resolve to control inflation. The Post's guest columnist Charles St-Arnaud writes that President Donald Trump's calls for lower rates and criticism of the Fed's independence raise concerns about its ability to address persistent inflation. The opaque communication style of the new Fed chair only adds to the uncertainty. Investors are therefore demanding a larger premium to hold long-term U.S. government debt in compensation. Canada is not an island, hence global financial developments inevitably reach our shores. Canadian 10-year yields have risen about 45 basis points this year, compared with a 100-basis-point increase in U.S. yields, resulting in a notable depreciation of the Canadian dollar. The smaller rise in Canadian yields is due to the country's strong credit rating and better fiscal position, along with weaker growth expectations from the U.S. trade conflict. However, Canadian yields are unlikely to decouple from U.S. yields and will rise less if U.S. yields continue to climb. Either way, borrowing costs are going to be higher in the coming months, unless inflation risks from high fuel prices decrease.