Strong employment numbers in both Canada and the United States have market watchers focusing on interest rates again, especially in the U.S. The Canadian figures, while impressive, are not as significant as the American numbers. Canada generated 44,000 new jobs in October but Statistics Canada says most were temporary positions created by the federal election.
In the U.S., strong job gains have bolstered the Fed's arguments for an interest rate increase in December. Unemployment is one of the key factors the central bank considers in its policy decisions. The jobless rate has dropped to 5%, which is deemed to be nearing full employment.
U.S. employment along with respectable wage growth and a turnaround in GDP appear to meet the Fed's requirements for 'lift off'. November's results will likely by the deciding factor.
An increase in the U.S. will not automatically translate into a Bank of Canada rate hike. Many feel the BoC will not increase rates until 2017. But given the tight linkage between Canadian and American bond yields there could well be implications for fixed rate mortgages here.
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