Weekly Digest

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May 10th, 2024

Job Reporting

With the US Job numbers coming in below expectations on Friday, rate market projections quickly shifted over the weekend. US unemployment is now at 3.90%, 175,000 jobs were added and wage growth was 0.20%. All three undershot expectations.

Canada’s job data arrived early this morning. Unemployment remained unchanged at 6.10% and Canadian employers added 90,000 jobs. The employment gains were concentrated on part time jobs. The unemployment rates in youth aged 15-24 continues to rise at the quickest rate (12.80%).

We Made It – Rate Cut Incoming?

Reminder from previous issues, we need the follow four triggers to hit before we can project a rate cut.

• Inflation starts with a “2” – Currently 2.90%

• Unemployment starts with a “6” – Currently 6.10%

• BoC communications and language will turn less hawkish – This occurred in January/February of this year

• The following meeting’s rate cut probabilities will exceed a 60% chance – Current odds are now 74%

We have now hit the 4 triggers for a rate cut. Will it happen in June? Or will it be July? Stay tuned for more data sets in May as the next Bank of Canada announcement is June 5th.

***Note these odds were BEFORE the Canadian employment data sets released this morning.

Scotiabank Economic Update

I had the great pleasure of joining Scotiabank on their top performer trip in Arizona this year. Farah Omran, Senior Economist presented and some highlights of her economic update are below.

GDP

Canada continues to lag behind the US, and all G7 countries with GDP growth.

Housing Costs and Interest Rates

Mortgage interests cost continue to eat up Canadian’s disposable income.

Wage Inflation

Wage inflation continues to drive inflation, but the labour market is beginning to normalize. This is evident in the rising unemployment rate now above 6%.

Prices

Even with all of the data above, prices still remain elevated.

Current Interest Rates

CONVENTIONAL

• 5 year fixed, 30 yr amortization – 5.24%

• 3 year fixed, 30 yr amortization – 5.44%

• 2 year fixed, 30 yr amortization – 6.20%

• 5 year variable, 30 yr amortization – Prime – 0.90% = 6.30%

• 5 year fixed, 25 yr amortization – 5.19%

• 3 year fixed, 25 yr amortization – 5.34%

• 2 year fixed, 25 yr amortization – 6.10%

• 5 year variable, 25 yr amortization – Prime – 1.00% = 6.20%

INSURED

• 5 year fixed, 25 yr amortization – 4.79%

• 4 year fixed, 25 yr amortization – 4.84%

• 3 year fixed, 25 yr amortization – 4.89%

• 5 year variable, 25 yr amortization – Prime – .90% = 6.30%

Fast Facts

• 106,300 – Millionaires currently living in Toronto, making it the 13th-wealthiest city in the world. Unsurprisingly, New York City took the top spot on the rankings with 349,500.