🧭 This Week in Markets
A stronger-than-expected employment report has pushed bond yields higher and along with it, fixed mortgage rate pressure.
The 5-year Government of Canada bond yield is ~2.76%—a level previously associated with 0.10% higher fixed rates than the current rate. Because fixed rates are largely priced off these bond yields, those looking to buy or renew in the next few months should reserve a rate.
It's important to note that this is a short term data bump, and it will be just as important to focus on the trends over a 3 month (quarterly) period.
Labour Market Surprise in October: Strong Jobs, With Some Underlying Weakness
October’s employment data defied expectations: +67,000 net jobs, unemployment dropped to 6.9%, participation rate rose, and wage growth accelerated to ~4.0% for permanent employees.
Key details:
Private sector job growth drove the gain (+73k), including manufacturing (+9k) and transportation/warehousing (+30k).
However, full-time jobs actually declined by 19k, while hours worked fell 0.2%—partly due to labour disputes.
Although the jobs data wasn’t incredibly strong overall, the labour stats suggest the economy isn’t softening as much as economists and the BoC expected, which in turn reduces the near-term likelihood of further rate cuts by the Bank of Canada.
In fact, markets now see minimal probability of a move: just ~10% odds of a cut in December, ~35% for all of 2026.
🏠 Fixed Mortgage Rate Warning
Why this matters: a rising 5-year bond yield tends to feed into fixed mortgage rates. Recently, when bond yields were at this level, fixed rates were ~0.10% higher.
Add the usual winter-renewal season bank behaviour (banks often notch up fixed rates ahead of spring), and the warning lights are flashing for anyone renewing, purchasing or thinking about a variable rate lock in soon.
If you're in the next 4-6 months of renewal or purchase, consider reserving a rate now rather than assuming further declines. You can always ‘float down’/ reduce the rate IF rates drop later.
🎯 Budget & Fiscal Stimulus: Added Fuel to Yields
The federal budget adds another layer of upward pressure on bond yields and fixed mortgage rates through government stimulus.
Although the Budget came in line with market expectations, with a C$78.3 billion deficit and large capital/infrastructure spending, fiscal stimulus is back in the driver’s seat. Markets view this kind of deficit-financed spending as inflationary, which tends to push bond yields (and fixed mortgage rates) higher, not lower.
The budget also contained large social housing commitments and re-training measures although some argue less “growth-oriented” than what the private sector wants (i.e., lower red-tape and taxes).
In short: monetary (ie. BoC) easing may be fading, but the fiscal fire-hose is ready to gush.
🏠 Mortgage Market Snapshot
5-Year GoC Yield: ~ 2.76 % ↑ 7 bps on the week
Typical 5-Year Fixed Mortgage: 3.69 % – 3.99 %
Variable-Rate Outlook: No further cuts expected near-term
🧩 The Setup: What Were Watching
Wednesday Nov 12: BoC Summary of Dilerberations
Friday Nov 14: Manufacturing Sales & Orders (Sep)
Will wages continue ticking up? If yes → further yield rises.
Oil/commodity prices and trade data: any surprises there could tilt the yield curve.
Renewals coming in winter: banks may raise fixed offers pre-emptively.
If the BoC holds steady and inflation creeps up, fixed rates may stay elevated or climb further.
Bottom line: fixed-rate tailwinds are now less reliable — risk is creeping in.
💡 Takeaway
Given economic stimulation from the BoC and federal government, and a stabilizing workforce, fixed mortgage rates may have bottomed for now.
The odds favour fixed rate increases rather than further cuts. If you’re in the market to lock or renew, it may make sense to stop waiting for lower rates and instead act.
Stay Tuned.