Category: Market Action

This will be delayed a bit. Sorry!

Jobs, jobs, jobs!:

Employers cut 92,000 jobs in February, the Labor Department reported on Friday, and the unemployment rate rose to 4.4 percent. The job losses cut across nearly all major sectors, including health care, which was weighed down by a nurses strike in California.
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• Job concentration: Health care employment fell by 19,000 jobs in February, dragged down by a nurses strike in California that kept 31,000 people out of work. The health care industry has powered job growth, driven by the country’s aging population. But that dominance has raised concerns that the job market is more vulnerable than top-line numbers suggest.
• Wages solid: Wage growth remained healthy, at 3.8 percent over the year. Average hourly earnings have been slowing very gradually, but remain relatively steady, suggesting that hiring is not being constrained solely by the supply of available workers.
• Participation drops: The share of people in their prime years who were either working or looking for work fell slightly in February, to 83.9 percent.
• Low hire, low fire: Employers for months have been in something of a holding pattern. The number of job openings in December, the most recent month for which data is available, fell to its lowest level since September 2020. At the same time, initial claims for unemployment insurance have stayed low, indicating that employers overall are not laying off workers in large numbers despite some headline-grabbing jobs cuts at major companies.
• Labor supply: The Trump administration’s immigration crackdown has contributed to slower growth in the supply of labor. That has made it difficult to determine if a slowdown in job growth is caused by decreasing demand for workers, fewer available job-seekers or a combination of both.
• Fed implications: The report is certain to stoke divisions at the Federal Reserve, which holds its next meeting on March 17-18. Some officials appear highly concerned about the health of the labor market and willing to cut rates to support it, while others seem more focused on the risk posed by inflation, especially given the conflict in the Middle East.

The BoC is touting success in issuing a blockchain bond:

The Bank of Canada (BoC), RBC Capital Markets, RBC Investor Services, TD Bank Group (TD), and Export Development Canada (EDC) successfully completed Project Samara, a collaborative initiative to evaluate how tokenization and distributed ledger technology (DLT) can improve bond issuance and settlement in a real-world setting.

As a key milestone in the experiment, EDC issued this week Canada’s first tokenized bond using DLT, with payments settled in wholesale central bank deposits. The bond was sold and traded and will be managed throughout its life cycle on the Samara Platform.

The Samara Platform was designed for the experiment to support end-to-end transactions throughout the bond’s life cycle—including cash and bond issuance, bidding, coupon payment, redemption and secondary trading—on DLT infrastructure. Built on Hyperledger Fabric, the platform integrates separate bond and cash ledgers and enables the transaction to be settled instantly, as well as secondary market trading and settlement of the tokenized bond, directly on-chain.

Building on earlier experimental work from the series of Jasper projects, Samara tested the real-world feasibility and implications of a DLT-based platform for capital markets, using a real bond funded and traded with central bank money. The project was structured as a limited experiment, involving the issuance of a single security—a $100 million Canadian dollar–denominated bond of less than 3 months—to a closed investor group.

The experiment revealed both the potential and the limitations of DLT in a real-world financial setting:

• Efficiency gains: across participants, both operational efficiency and data integrity were improved, and workflows were streamlined
• Operational and governance complexity: efficiency gains were partially offset by system complexity, liquidity costs, the need for new governance structures, and increased attention in coordination, reporting and oversight
• Risk management: counterparty and settlement risk were reduced, but new operational risks related to technology, auditability and fallback mechanisms were introduced
• Regulatory and legal considerations: some centralized roles (such as a marketplace operator, custodian and off-platform trade reporting) highlighted gaps between the current regulatory framework and DLT principles
• Adoption barriers: despite technical feasibility, broader adoption will likely be slow due to several factors, such as integration challenges and limited appetite for core infrastructure changes.

Overall, Project Samara generated valuable insights into the practical application of DLT in capital markets. These insights provide a foundation for future work, and, while impacts in the short term are uncertain, the technology appears well-positioned to deliver efficiency and resilience benefits over the long term. Comprehensive findings of the project can be found in the Project Samara Research Paper.

The BoC has released a new Staff analytical paper by Bruno Feunou, Jean-Sébastien Fontaine, Rishi Vala titled Macro News in Market Moves: Classifying News through Asset Co-movements:

This paper introduces CLONE (Classification Of News), a method that decomposes asset price movements into four types of macroeconomic news—aggregate demand, productivity, inflation, and monetary policy—based on joint changes in prices of stocks, bonds, and inflation swaps. CLONE’s simplicity and forward-looking focus enable the identification of real-time economic signals that are critical for understanding market behavior and guiding policy decisions. We show that from 2004 to 2024 aggregate demand news historically dominated daily variation in asset prices, while inflation and monetary policy news have gained importance since 2021. We validate our method against sign-restricted VAR models and apply it to major U.S. macroeconomic data releases, providing insights into how market participants interpret and react to forward-looking information. We discuss several benefits of our approach relative to the standard sign restriction method.
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At its core, CLONE classifies each day based on the realized combination of daily price changes of U.S. stocks, bonds, and inflation swaps.2 These daily asset price changes capture forward-looking responses to “news” because asset prices reflect expectations (and uncertainties) about future payoffs sensitive to economic outcomes, and new information, or “news”, leads to revisions in those expectations. We interpret each realized combination of asset price changes as reflecting the dominant news affecting markets on that day. Under our framework, each day reflects either (1) news of future aggregate demand, (2) news of future inflation, (3) news of future productivity, or (4) news of future monetary policy.
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CLONE’s simplicity is also its key limitation. Since we identify each day with one news type, we ignore the possibility that certain days can signal more than one news type , and we can attribute noisy days with no news to a given news type. However, if news tends to disperse slowly over time, a bulk of the classification errors average out when we aggregate the daily identification to the monthly or quarterly frequency. In Section IV, we more formally discuss how our assignment of a single news type to each day can be interpreted as inferring the dominant source of news on that day, and how CLONE produces qualitatively similar conclusions as traditional SVARs.

We introduce CLONE, a simple and transparent decomposition of asset price movements. CLONE classifies the type of macroeconomic news revealed from stocks, bond yields, and inflation swap rates. The news components identified by CLONE exhibit persistent effects on asset prices, produce qualitatively similar conclusions to those obtained from sign-restricted SVARs, and align well with revisions in professional forecasters’ and businesses’ expectations of macroeconomic and financial variables in the direction we would expect.

We show that aggregate demand news accounts for the largest share of daily variation in the S&P 500, the 2-year U.S. Treasury yield, and the 2-year inflation swap rate over 2004–2024. More recently, between 2021 and 2024, the importance of inflation and monetary news increased markedly, reflecting a shift in the dominant drivers of asset price movements.

Finally, we examine the information content of FOMC announcements and major U.S. macroeconomic data releases. While FOMC communications are traditionally associated with monetary policy news, they have increasingly conveyed information about inflation in recent years. At the same time, we find that productivity-related news plays a central role in explaining stock market returns and movements in inflation swap rates, highlighting an additional and often underappreciated dimension of information revealed at policy and data announcements.

PerpetualDiscounts now yield 5.70%, equivalent to 7.41% interest at the standard conversion factor of 1.3x. Long corporates yielded 4.82% on 2026-3-4. Therefore the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has narrowed slightly (and perhaps spuriously) to 260bp from the 265bp reported February 25

Bell Canada announced some hybrid notes on 2026-2-9:

Bell Canada (Bell) today announced the offering of Cdn $1.5 billion aggregate principal amount of Fixed-to-Fixed Rate Junior Subordinated Notes in two series (the Offering).

The Cdn $750 million Fixed-to-Fixed Rate Junior Subordinated Notes, Series D due 2056 will be issued at a price of Cdn $99.975 per $100 principal amount, will initially bear interest at a rate per annum of 5.375% and reset every five years starting on May 12, 2031 at a rate per annum equal to the five-year Government of Canada yield plus a spread of 2.388%, provided that the interest rate during any five-year interest period will not reset below 5.375% (the Series D Notes). The Cdn $750 million Fixed-to-Fixed Rate Junior Subordinated Notes, Series E due 2056 will be issued at a price of Cdn $99.970 per $100 principal amount, will initially bearinterest at a rate per annum of 5.875% and reset every five years starting on May 12, 2036 at a rate per annum equal to the five-year Government of Canada yield plus a spread of 2.440%, provided that the interest rate during any five-year interest period will not reset below 5.875% (together with the Series D Notes, the Notes).

The Notes are being publicly offered in all provinces of Canada through a syndicate of agents. Closing of the Offering is expected to occur on February 12, 2026, subject to customary closing conditions. The Notes will be fully and unconditionally guaranteed by BCE Inc.

Bell intends to use the net proceeds from the Offering to repurchase, redeem or repay, as applicable, senior or subordinated indebtedness of Bell and for other general corporate purposes.

The Offering is being made pursuant to Bell’s amended and restated short form base shelf prospectus dated February 6, 2025 (the amended and restated base shelf prospectus). Bell willfile a prospectus supplement to the amended and restated base shelf prospectus relating to this Offering with the securities regulatory authorities in all provinces of Canada.

Only a thirty-year term on both series, but the Series D’s 5.375+2.388M5.375 as interest is a lot cheaper to issue than any preferred shares I’ve seen lately! It’s an interesting wrinkle that Series E has a ten-year initial fixed rate period.

The prospectus is available on SEDAR+ which prohibits direct links as it is the policy of the Canadian Securities Administrator to give their pals at the Toronto Stock Exchange as much opportunity as possible to charge for efficient access to public documents. It may be found by searching for Bell Canada / Bell Canada (000001645)
Prospectus (non pricing) supplement (other than ATM) – English.pdf
10 Feb 2026 22:41 ESTFebruary 10 2026 at 22:41:17 Eastern Standard Time
Québec
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The TXPR price index set a new 52-week high today of 699.05, eclipsing the old mark of 698.89 set on 2026-2-27 (which I didn’t report).

Canada’s GDP fell in 25Q4, but it’s not as bad as it sounds:

Statistics Canada reported a fourth-quarter contraction in real gross domestic product Friday that economists argue conceals some promising details in underlying economic data.

Statscan said Friday that real GDP declined 0.6 per cent on an annualized basis in the fourth quarter, falling short of expectations for flat growth from the Bank of Canada and most economists.

Statscan said the main culprit was businesses drawing down their inventories – in other words, selling off goods or materials that weren’t reproduced in the quarter.
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StatCan said a rise in household spending and increased government capital spending – particularly on weapons systems – gave the economy a lift in the quarter. Business investment, meanwhile, declined thanks to weakness in residential activity.
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Last quarter’s contraction came after real GDP growth of 2.4 per cent in the third quarter, which Statscan revised down slightly from initial estimates. The economy also shrank in the second quarter as tariffs took full effect in the economy, but Statscan also revised that decline to 0.9 per cent from previous estimates of a steeper 1.8 per cent contraction.
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StatCan said real GDP rose 1.7 per cent in 2025 overall, cooling from 2-per-cent growth in each of the previous two years and marking the slowest pace of annual growth since 2016, outside the COVID-19 pandemic.

And the US PPI caused shock and consternation:

U.S. producer prices accelerated in January, with the cost of goods outside the volatile food and energy category increasing by the most in more than 3½ years as businesses passed on import tariffs and raised prices at the start of 2026.

The stronger-than-expected increase in the Producer Price Index reported by the Labour Department on Friday reinforced economists’ expectations that the Federal Reserve would not resume cutting interest rates before its June 16-17 meeting.

The PPI was boosted by a widening in margins, including for professional and commercial equipment wholesaling as well as apparel, footwear and accessories retailing.
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In the 12 months through January, the PPI increased 2.9 per cent after rising 3 per cent in December. The moderation in the year-on-year producer inflation rate reflected the dropping out of last year’s high readings from the calculation.

Core PPI rose 0.8 per cent last month after gaining 0.6 per cent in December. Core producer inflation increased 3.6 per cent on a year-over-year basis. The report was delayed by a brief shutdown of the federal government that ended early this month.

Services prices jumped 0.8 per cent in January, reflecting a 2.5 per cent increase in trade services, which measure changes in margins received by wholesalers and retailers. Margins for professional and commercial equipment wholesaling surged 14.4 per cent, indicating businesses were passing on tariffs.
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The PPI report contributed to a stock market drop on Wall Street. The dollar slipped against a basket of currencies. U.S. Treasury yields mostly fell.

For the first time in a long time, the median YTW for PerpetualDiscounts exceeds that of FixedReset Discounts!

PerpetualDiscounts now yield 5.69%, equivalent to 7.40% interest at the standard conversion factor of 1.3x. Long corporates yielded 4.74% on 2026-2-25. Therefore the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has widened slightly (and perhaps spuriously) to 265bp from the 260bp reported February 18