The U.S. Federal Reserve will eventually raise its benchmark interest rate; the question is when.

Given the stronger-than-expected jobs numbers for February, the market now guesses that the first move will come at the Federal Open Market Committee’s June meeting.

And the strong February numbers are part of a long-term trend: With the addition of 295,000 jobs in February it’s now 12 straight months of 200,000-plus. At 10 months straight it was the longest such streak in 30 years.

The unemployment rate continues to decline. At 5.5%, we’re getting closer and closer to “full employment.” This comes after an uptick in labor-force participation rate in January to 62.9% (from 62.7% in December) caused unemployment to rise to 5.7%.

And over the past few months wages have begun to rise as well. Average hourly earnings were up 1.9% year-over-year in December, 2.2% in January and 2% in February.

That’s still below levels seen during typical recoveries, and wage growth below 3% is an argument against a rate hike by the Fed. Slow wage growth is likely a function of very low inflation, another data point the fed will weigh in its rate-hike calculus.

Even as the Fed stands on the verge of its first rate increase since September 2006, other central banks are in easing mode.

And trend economic growth is likely to remain slower than historical norms throughout advanced economies due to significant changes in the labor force and in productivity growth, which have been slowing across the developed world. Indeed, record-low interest rates are the result of both cyclical and structural factors.

But even when rates begin to normalize, lower potential growth will keep more of a lid on the ultimate level of interest rates than in the past. It follows that bond yields will remain lower across the maturity spectrum.

Moreover, a lower natural resting place for global policy rates raises the risk that an economic shock will push them back to the zero bound.

A new normal of low rates in advanced economies for the long run presents yield-focused investors with a challenge: how to find consistent, reliable and, ultimately, growing income streams.

Slower trend economic growth implies slower trend growth in corporate profits, and that suggests equity returns will also be lower than in the past. But equities will look more attractive on a relative return basis.

We continue to emphasize high-quality, dividend-paying, essential-service equities—wherever in the world they’re located, including Canada—in response to this set of what appear to be durable circumstances.

The shock of the Fed’s first interest rate move of any kind since December 2008 and its first increase in nearly a decade—reflected in the market’s reaction to the February jobs report, a triple-digit sell-off for the Dow Jones Industrial Average—will create long-term buying opportunities in utilities, REITs, telecoms, midstream master limited partnerships, and other equities perceived to be sensitive to rising rates.

We don’t question that the Fed will raise interest rates. We stress, however, that the ceiling for market rates is lower than historical norms and that yield-hungry investors will, after digesting the fact of a 25- or even 50-basis-point rate hike by the Fed, continue to turn their capital to dividend-paying equities.

In Closing

Please let us know what you think about the service or post any questions you may have to the Stock Talk forum at www.CanadianEdge.com. We’ll be sure to post a reply within 24 hours.

And be sure to join me for the next installment of my monthly online chats with subscribers on Wednesday, March 25, 2015, at 2 p.m.

Go to www.InvestingDaily.com/Canadian-Edge/live-web-chats/ for more information and to sign up to receive an e-mail notification for the event.

I stick around to answer just about every question asked, so if there’s something on your mind that’s not addressed in an issue or on the Stock Talk forum, this is a great opportunity. And thanks for reading Canadian Edge.