Bond Traders Seek Shelter: What the Latest Jobs Report Means for You!

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In a twist that even the savviest investors didn’t see coming, Canada just dropped its most critical economic report since the Consumer Price Index. The **unemployment figures** have sent shockwaves through the financial world, sending bond traders scurrying for cover like kids on a rainy day. When they sense trouble, it’s off to the **government bonds**—the safe haven that keeps their investments afloat. And guess what? This rush is driving bond prices up while slashing long-term **interest rates** down.

As we write this, Canada’s five-year government yield is plummeting to a nine-week low. This development is set to inspire some immediate cuts in fixed-rate mortgages, especially for those that are default insured and adapt quickly to shifts in the **bond market**.

But here’s the kicker: the big banks, who finance most mortgages in this country, are becoming increasingly obsessed with their margins. As we enter the traditionally slow season for mortgages, they’re eyeing ways to offset shrinking loan volumes by boosting margins per loan.

And you know what’s caught fire? **Floating rate mortgages**! They’re now sizzling hotter than your favorite summer outfit. With the **Bank of Canada** poised to ease rates, it’s only going to fuel that demand further. Plus, variable rate interest is making some lenders **quietly tighten** their discounts from the prime rate.

The net effect? Central bank cuts will deliver slightly less savings for newcomers looking to sign up for **variable rate mortgages**.

If you’re already on the floating rate train, rejoice! You might save anywhere from 25 to 50 basis points on your mortgage. Bond market predictions suggest there’s a better-than-75% chance of the latter happening.

Economists are buzzing, and it’s not just because of the coffee. With slack building in the **labour market**, modest **GDP** growth, and inflation hovering around the target, expectations are high for a **50 basis point rate cut** from the Bank of Canada next week. This would mark the second whopping reduction in a row for our central bank, which has already cut rates more than any other G7 country.

A half-point cut could slice off about $120 from the monthly interest for the average floating rate mortgage holders, depending on their specific loan type. Multiply that across millions of mortgages, and boom! Our economy gets a jolt stronger than a double espresso!

More consumer spending could very well mean inflation rebounds sooner and less need for deep cuts next year. Not to forget, there’s the potential boost from U.S. growth, especially if our leaders can charm the new administration out of those pesky tariffs.

On the fixed mortgage side, the rise in joblessness and falling yields means the heat is off rates for the foreseeable future. The fireworks begin on Wednesday, when traders will be eagerly anticipating the crucial U.S. CPI report and the hints from the **Bank of Canada**’s governor about future rates.

Looking past the market buzz, the data continues to indicate that we may see **100 to 125 basis points** in central bank rate cuts moving forward. If that prediction holds true, it favors **variable and three-year fixed mortgage rates** the most. Borrowers are already jumping in like they have a secret tip-off!

Mortgage Rates

The rates displayed below are updated by the end of each day and sourced from the Canadian Mortgage Rate Survey.

Can’t view the charts? Click here.

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