First National Financial LP

Market Commentary: The latest employment numbers, an update on rates and curves and more

  • Neil Silverberg, Analyst, Capital Markets

TGIF. Although we may not have a clear winner of the U.S. presidential election at this point, the real winners are all those that went to bed early on election night knowing there would not be a result.  That, plus anyone who bought the dip last week – the Nasdaq is up 9% since election day! Who would have thought?


We are marching closer and closer to a final count. Not much changed on Thursday but as of this morning there are some important updates. In case you got tired of watching the results, here is where we currently stand:

Biden is on the brink of winning his presidential bid. The latest electoral college vote count is Biden at 264 (if you include Arizona) and Trump at 214.

The states in play: Arizona, Georgia, Nevada and Pennsylvania. AP and Fox have already called Arizona for Joe Biden however Biden’s lead is slowly dwindling causing the remaining networks to hold off on calling that race. Arizona’s next update will be posted at 11 am.

In Pennsylvania, Biden has taken the lead according to CNN and a few other sources are even calling the race. Biden’s lead is expected to increase as mail-in votes continue to be counted, causing Trump’s team to file multiple lawsuits. Most of these lawsuits have been thrown out at this point – the counting continues.  As of Friday morning, Biden has also taken a slight lead in Georgia.

The Senate race, which for businesses could be viewed as one of the more important outcomes of this election is still murky. If it does fall into the Republican’s hands, the expectation of a large stimulus package amid the COVID resurgence is unlikely to get approved quickly. The market is pricing that in with lower yields assuming that the FED (QE) is the only help that the economy may have access to.

The closer the race is, the longer this will take as recounts and/or court rulings may still be on the horizon.


In additional up to the minute news, the Canadian October Labour Force Survey was released this morning.  In light of renewed restrictions coming into various provinces across Canada, there were just 83,600 jobs added in October. This is a substantial deceleration from the 378,000 jobs added in September.

The categories that took the largest hit were food services, accommodation and recreation who saw a decrease of 60,000 jobs on the month. Furthermore, of the 83,600 jobs added, approximately 69,000 of them were Full-Time positions which continues to re-affirm the view that high-wage earners are recovering from February highs much faster than lower-wage employees.

Canada’s unemployment rate now stands at 8.9%, down from 9.0% in September.

Rates and Curves

Currently, 5-year GoC’s are yielding 0.40% and 10 year GoC’s were yielding 0.64%.  Those yields are down about 1 bp and 2 bps respectively compared to last Friday.

5 and 10-year CMB’s paint a similar picture down 1 bp and 2 bps respectively compared to last Friday. 5-year is currently at 0.65% and 10-year at 1.08%.

In case you missed it:

  • The FOMC had a rate decision this week – there was no change. Powell’s tone was notably a bit more cautious compared to his previous speech as he discussed a resurgence of coronavirus cases in the U.S., lockdowns in Europe and even suggesting that the second wave may pose a bigger risk to the economy than the first one. The Fed has begun discussions on modifying their asset-purchase programs. Lastly, Powell who at this point is left with a depleted toolbox, reiterated the need for more fiscal relief though that would be up to congress to determine specific measures. Meeting notes will be released in three weeks.
  • The Bank of England also had an announcement on Thursday and left their benchmark rate at 0.1%. Additional QE is coming down the pipeline starting in January just as the U.K. enters new lockdown provisions on Thursday.
  • OSFI announced that they are extending their leverage exclusions for GoC bonds and Central Bank reserves until December 2021. This will allow short-dated assets to be purchased by banks and maintain liquidity in the fixed income market.

Ontario released their 2020 budget on Thursday. Notably, the government says that revenues from alcohol in Ontario have increased $8 million compared to this time last year. That’s one way to get through 2020.

Thanks for reading and have a good weekend.


This Commentary was last updated at 11am, information may have changed since this update.