CANADA DATA: Unemployment Ticks Higher, Youth/55+ Pickup Remains Notable (3/3)
Oct-10 17:58
The Canadian unemployment rate ticked up in September, but to just 7.10% unrounded from 7.07% prior, vs median analyst expectations for a rounded 7.2%. This was still a fresh post-2016 (ex-pandemic rise) high, albeit only barely so.
- Looking under the hood, the number of unemployed rose for a 3rd consecutive month (by 12k to 1,607k) as the labor force increased by 72k, more than reversing the prior two months' drops.
- That came as the participation rate picked up to 65.25%, a 3-month high.
- Population growth remained meagre, just 28k, slowest since 2021 in what is likely a result of immigration restrictions.
- As with the employment readings, which showed strong improvements for prime-age (25-54 year old) Canadians but weakness for the other two demographics, 15-24 unemployment ticked up 0.21pp to 14.66%, the highest since 2010 when excluding the 2020-21 pandemic period. 55+ unemployment rose even more, by 0.26pp to a post-2018 (ex-pandemic) high 5.52%, even though participation dropped (0.33pp to 35.61%).
- But the prime-age population saw a 0.08pp downtick in unemployment, with a 0.57pp jump in participation to 88.6% that erased the drop of the prior 2 months. There will be questions about dynamics in the other two age demographics, but the improvement here will assuage concerns of a weakening core of the labor force.
- Finally, wage growth remained steady at 3.3% Y/Y (has been 3.2-3.3% each of last 4 months) with permanent wage earners seeing a 3rd consecutive month of 3.6% Y/Y gains. These are below 4+% readings seen in 2024 but suggest that the labor market isn't loosening too severely.
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BONDS: EGBs-GILTS CASH CLOSE: Short-End Underperformance Ahead Of ECB
Sep-10 17:56
EGBs and Gilts traded in mixed fashion Wednesday, with underperformance at the short end of respective curves.
- While Gilt yields remained within this week's ranges throughout the day, 10Y Bund yields touched an intraday post-Aug 7 low in early trade as markets digested overnight news of Poland downing Russian drones in its territory.
- Lower-than-expected inflationary pressures in the US producer price report saw a brief rally across global core instruments, but EGBs and Gilts were content to drift into the cash close ahead of event risk Thursday.
- The German curve twist flattened on the day, with the UK's bear flattening.
- OAT spreads were little changed albeit underperformed periphery/semi-core EGBs more widely, following overnight news that French President Macron had named centrist/ex-defence minister Lecornu as the new Prime Minister.
- While US CPI will garner significant attention, Thursday's European highlight is the ECB decision (MNI preview here in PDF).
- Along with the expected rate-hold along with communications reiterating a data dependent approach, Lagarde's characterisation of economic resilience and/or the extent to which uncertainty has been alleviated by the US-EU trade deal should help shape market reaction.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is up 1.1bps at 1.952%, 5-Yr is unchanged at 2.225%, 10-Yr is down 0.7bps at 2.652%, and 30-Yr is down 0.7bps at 3.273%.
- UK: The 2-Yr yield is up 2.6bps at 3.94%, 5-Yr is up 1.8bps at 4.055%, 10-Yr is up 1bps at 4.633%, and 30-Yr is up 0.5bps at 5.482%.
- Italian BTP spread down 0.6bps at 81.5bps / French OAT spread down 0.3bps at 80.9bps
US TSY OPTIONS: Oct'25 10Y Call Fly Sale
Sep-10 17:44
- -8,170 TYV5 112.5/113.5/114.5 call flys, 20 vs. 113-15/0.05%
US: Trump Continues To Struggle On Handling Of The Economy
Sep-10 17:41
Donald Trump's presidential approval rating stood at 42% in recent days, with the president getting higher marks for his handling of crime and immigration versus the economy, according to a new Reuters/Ipsos survey.
- Reuters notes: “Trump gets relatively poor marks on his handling of the economy, with 36% of Americans liking his economic stewardship and just 30% backing his handling of the cost of living for U.S. households.”
- Semafor notes: “If elections are a referendum on the economy, President Donald Trump and his GOP allies in Congress have their work cut out for them. Unemployment is rising, tariffs are still biting, and inflation hasn’t yet abated.
Figure 1: % of Americans who Approve of the President’s Handling of the Economy
Source: Reuters/Ipsos
