COVID – Been There, Done That
The Canadian economy continues to storm back from the pandemic. Today’s Labour Force numbers were jaw-dropping:
- 336.6K jobs created vs expectations of 127.5k
- Unemployment rate falls to 5.5% vs 6.2% expected (just above pre-pandemic low of 5.4%)
- Participation rate increases from 65.2% to 65.4%
- Hours worked increases by 3.6%
- Wages accelerate to 3.1% YoY
With Russian sanctions adding pressure on domestic commodity and agriculture producers to increase output, the demand for labour should remain strong.
The Bank of Canada should hike 25 bps in April.
We continue to expect them to raise rates a couple more times before potentially pausing to assess the impact of the Russian invasion, sanctions, and higher interest rates on the economy and inflation.
Bond yields should continue to drift higher over the next 12 months or so.