First National Financial LP

Market Commentary: Softening economic data equals rate hold?

  • Michelle Tan, Director, Capital Markets

Today’s market focus was on Canada’s employment numbers.  The unemployment rate rose to 5.8%, in line with expectations, and up 0.8% since the beginning of the year. On the other side, the labor market beat expectations by adding 24.9K jobs in November while wage growth for permanent employees held steady at 5%.  

Historical Chart on CANADA Labor Force Unemployment Rate:


Yesterday’s Canadian GDP data followed a similar trend, showing a YoY change of -1.1%. Revisions to prior months resulted in GDP being net flat over the last two quarters.
Overall, the economy is showing signs of weakness under the force of higher rates in line with the BoC’s plans to bring inflation back down to 2%.  We cannot entirely shut the door for further rate hikes in Canada but if inflationary risks remain under control it seems that they are done for this cycle. We expect to see BoC to hold its policy rate steady on Dec 6th .
CMB spreads continue their performance, moving back towards the recent lows on spread versus GoC bonds.  Bond yields continue lower this morning across the board.  5yr and 10yr CMB yields have each seen a 45bps drop since November 1st – it’s a great time to call your local First National advisor to ask about our early rate lock program.
Current bond yields:


3.84% 3.59%


3.96% 3.53%