Employment Data and CPI – January 13th-19th, 2025

Employment Data and CPI – January 13th-19th, 2025

 
 
 

Weekly Digest

January 13th -19th, 2025

 
 

Interest Rates

Since Christmas, the 5 year Canada Bond Yield has been on an up and down swing. With lots of political commentary dominating the news cycle, and the fear that inflation is not contained in the United States, it is causing large variances in bond yields.

 

Rate forecasts have been altered because of this. The below chart represents the big 6 banks in Canada and their projections moving forward.

RBC is the most optimistic while Scotiabank is the most pessimistic. It is important to note, Scotiabank was the only lender to correctly predict the post covid wave of rate hikes so I take the most stock in their forecasts.

 

In the USA traders have pushed the next Fed easing all the way out to September. And, even that might be optimistic pending tariff threats. In Canada, markets still see two, 0.25% cuts, but they’re now fully priced for March and December:

For this month, were sitting at an approx. 50/50 split for another rate cut.

  • For the Bank of Canada meeting on Jan. 29:
    • 0.25% cut: 56% chance
    • No change: 44% chance
  • For the Federal Reserve meeting on Jan. 29:
    • 0.25% cut: 3% chance
    • No change: 97% chance

 

Employment Data – Canada

Canada added 91,000 jobs last month, well above analysts’ expectations. The banner month reduced the national unemployment rate down to 6.7%.

  • Employment change: +90.9k (est. +25k)
  • Unemployment rate: 6.7% (est. 6.9% | prior 6.8%)
  • Incomes: Wage growth dipped to 3.7% y/y (est. 3.8% | prior 3.9%) for permanent employees. The BoC wants to see it closer to 3%.
  •  

StatsCan estimates employment growth was the highest in two years. Full-time job gains among those aged 25+ hit >48,000, more than twice the five-year average

 
 
 

Employment Data – USA

The US economy continues to roll.

  • Employment change: +256k (est. +165k | prior +212k)
  • Unemployment rate: 4.1% (est. 4.2% | prior 4.2%)
  • Average Hourly Earnings: 0.3% m/m (est. 0.3% | prior 0.4%)
  •  

U.S. unemployment remains historically low and President Trump seems determined to keep it that way. With more job growth of this caliber, we could soon be looking at unemployment back in the 3% range. This is hard to fathom with rates this restrictive. It certainly highlights how much deficit spending can turbocharge an economy.

 

CPI – USA

Headline inflation accelerated for the fourth month in a row which is causing concerns for interest rates in the US.

  • Headline inflation: 2.9% y/y (est. 2.9% | prior 2.7%) and 0.4% m/m (est. 0.3%)
  • Core inflation: 3.2% y/y (est. 3.3% | prior 3.3%)
 

 

Housing Market Conditions

The total number of sales in GTA’s real estate market for 2024 was 67,610. This was a rise of 2.6% over 2023.

Home sales rose 2.8% in November after already jumping 6.8% in October. 

Home prices, as reflected in CREA’s HPI Index, increased by 0.5% m/m in November and 0.3% in December. Prices are down 1.2% y/y.

 
 

GTA home sales of $3+ million properties surged 40% y/y, according to RE/MAX. More of these sales are happening further away from Toronto’s core.

 

Current Interest Rates

CONVENTIONAL

  • 5 year fixed, 30 yr amortization – 4.54%
  • 3 year fixed, 30 yr amortization – 4.44%
  • 2 year fixed, 30 yr amortization – 5.74%
  • 5 year variable, 30 yr amortization – Prime – 0.50% = 4.95%
  • 5 year fixed, 25 yr amortization – 4.54%
  • 3 year fixed, 25 yr amortization – 4.44%
  • 2 year fixed, 25 yr amortization – 5.64%
  • 5 year variable, 25 yr amortization – Prime – 0.60% = 4.85%

 

INSURED

  • 5 year fixed, 25 yr amortization – 4.49%
  • 4 year fixed, 25 yr amortization – 4.49%
  • 3 year fixed, 25 yr amortization – 4.19%
  • 5 year variable, 25 yr amortization – Prime – .85% = 4.60%

 

Fast Facts

  • 38% – Share of Canadian debt held by Millennials, making them the largest debt-holding generation in the country. It’s the first time any generation has carried more debt than Baby Boomers.
  • $2,109 – Average asking rent in Canada last month, a 17-month low. Asking prices, which were down 3.2% compared to December of 2023 and have declined for five months in a row.