Split Institutional Forecasts and Mixed U.S. Data: Zero Visibility Ahead of the October 28 BoC Decision

Published Friday, October 2, 2026 · Rates, market figures and outlooks in this article reflect its publication date and may differ today. Ask us for the latest picture. Translated from the Korean original.

Ahead of the Bank of Canada's (BoC) policy rate decision on October 28, forecasts from major financial institutions are sharply divided, and this week even the U.S. bond market and employment data sent opposing signals, adding to market confusion. On Wednesday, U.S. long-term bond yields hit a new high for the year, pushing tension to its peak, but this morning's U.S. non-farm payrolls report sharply lowered the odds of another Fed rate hike, sending the direction of monetary policy even deeper into the fog.

Key Points

• Sharp split among major institutions: Manulife forecast "consecutive rate hikes," citing upward price pressure and a jump in Canada's 2-year bond yield, while CIBC and TD leaned toward an "extended hold," citing Canada's stable core inflation (near 2%), clearly distinct from the U.S. (in the 3% range), and the economic drag from U.S. trade tariffs (Growth Drag) — a head-on clash.
• U.S. long-term yields hit a new high on Wednesday: Chronic fiscal deficits and the burden of Treasury supply pushed U.S. long-term bond yields to a high midweek, delivering a strong "bear steepening (sharp rise in long-term yields)" shock to global markets.
• This morning's U.S. non-farm payrolls and a sharp drop in Fed hike odds: The U.S. September non-farm payrolls data released this morning showed a clear slowdown, sharply reducing the previously rising odds of another Fed rate hike this year.
• Crossing domestic and global macro signals: High oil prices from the Middle East and currency volatility are still pushing toward rate hikes, but weak Canadian domestic demand, the tariff shock and signs of a cooling U.S. labour market are at the same time strengthening the case for the central bank to hold rates.

What It Means

Canada's financial markets have now entered a true "zero visibility" state where it is hard to see even one step ahead. Until Wednesday, fears of global tightening dominated the market due to the surge in U.S. long-term bond yields, but this morning's U.S. non-farm payrolls data knocked down the odds of further Fed hikes, making the market's calculations even more complicated. On top of that, even Canada's Big Five banks and major institutions are completely split between an October hike (Manulife) and a hold (CIBC, TD), so even professional institutions are unable to point in a single direction.

This clash of opposing signals looks set to maximize mortgage rate volatility right up until the Bank of Canada meeting on October 28. The slowdown in non-farm payrolls has eased fears of further Fed hikes somewhat, but long-term bond supply-and-demand instability and Canada–U.S. tariff issues are still firmly blocking 5-year fixed mortgage rates from falling. Variable rates, too, stand at a crossroads between a continued hold or a further hike, depending on the central bank's October decision.

At a time when even experts' predictions are 180 degrees apart, risk management should come first rather than betting on a particular direction. If you have a mortgage renewal coming up or are planning a new home purchase, we recommend securing a rate hold to get ahead of the risk of sharp rate swings, and focusing on building a conservative cash-flow defence line so that your household stays steady whatever decision is made.