Investors and traders are likely relieved that today’s employment data didn’t add to the market confusion.
The Numbers.
Canada
- 1.1k jobs created (20k expected)
- Unemployment rate 6.6% (6.7% expected)
- YoY hourly wage growth 4% (3.7% expected)
US
- 151k jobs created (160k expected)
- Unemployment rate 4.1% (4% expected)
- YoY hourly earnings growth 4.1% (4% expected)
The Implications.
The Canadian data suggests the tariff saga has stalled hiring, particularly within sectors most exposed to tariffs. Weakness in those areas was offset by gains in wholesale & retail employment, which benefited from improving consumer spending due to lower interest rates. Bond traders have priced an 85% chance that the Bank of Canada will cut 25 bps next week.
The US employment data confirms that the US economy is slowing a little, but not enough to accelerate action by the Federal Reserve. The treasury market is still expecting 75 bps of rate cuts later this year.
Although yields have dropped 2-5bps, the market remains vulnerable to statements from the White House.
