The 5-year bond yield is soaring over 23 basis points as we speak!

It’s the biggest jump in bond rates in over a year and it comes on top of strong gains over the previous few days.

The yield is now near an 11-month high, and that means fixed mortgage rate increases are around the corner.

If you’re home hunting and wondering if you should lock in a mortgage rate, don’t waste any more time.  Protect yourself now with a rate hold or pre-approval.  There’s now a much higher probability we won’t see today’s insanely low fixed rates again for a while.

What’s behind all this?  Today’s positive employment report is the big driver.  It caught the bond market totally off guard.

Here’s what analysts are saying:

• Action Economics: “The impressive September employment report has fed speculation that the BoC will follow the RBA and tighten earlier than expected.”
• National Bank:  “With the recession over in the labour market and the biggest decrease in the unemployment rate since November 2005, our call for a rate increase by the Bank of Canada in the first quarter of 2010 remains on track." (Globe)
• Scotiabank:  “…It will feed growth prospects and inflation fears and raise market concerns regarding the BoC’s conditional rate commitment.” (National Post)
• BMO Nesbitt Burns:  “This is the sound an economy makes when an economy recovers.” (Globe)
• RBC Economics:  “…At 8.4% the unemployment still implies considerable slack in this economy. This provides reason for the Bank to maintain its commitment to a 0.25% policy rate until mid-2010.” (National Post)
• TD Securities: “We believe that it will certainly lead the Bank of Canada to focus on the timing of future interest rate increases set out in its conditional commitment to hold interest rates at the current level until Q2 2010. Nonetheless, while for now we continue to expect the policy rate to remain unchanged until Q4 2010, we think that the risks of an earlier move have increased dramatically." (Globe)

Get prepared for all the previously dovish economists out there to start shifting to their “other hand” very soon…