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TXPR closed at 533.62, up 1.14% on the day. Volume today was 2.27-million, near the median of the past thirty days.

CPD closed at 10.655, up 0.52% on the day. Volume was 70,852, very low in the context of the past 30 trading days.

ZPR closed at 8.31, up 0.97% on the day. Volume of 208,882 was about at the median of the past 30 trading days.

Five-year Canada yields were up 2bp at 0.38% today.

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TXPR closed at 528.14, up 0.82% on the day. Volume today was 1.57-million, third-lowest of the past thirty days, ahead of only May 19 and May 21.

CPD closed at 10.59, up 1.34% on the day. Volume was 157,697, above the median of the past 30 trading days.

ZPR closed at 8.22, up 0.74% on the day. Volume of 318,788 was above the median of the past 30 trading days.

Five-year Canada yields were unchanged at 0.37% today.

DBRS downgraded Cenovus:

DBRS Limited (DBRS Morningstar) downgraded Cenovus Energy Inc.’s (Cenovus or the Company) Issuer Rating and Senior Unsecured Debt rating to BBB (low) from BBB and removed the ratings from Under Review with Negative Implications, where they were placed on March 26, 2020. Both trends are Negative. On March 26, 2020, DBRS Morningstar placed Cenovus’s ratings Under Review with Negative Implications in response to the extreme price declines and heightened volatility in crude oil markets largely caused by the rapid spread of the Coronavirus Disease (COVID-19) and the concurrent crude oil-price war between OPEC (led by Saudi Arabia) and Russia. Subsequently, DBRS Morningstar revised its commodity price assumptions to factor in (1) the impact of the coronavirus pandemic on crude oil demand as lockdowns ease, (2) the significant buildup in global oil inventories, and (3) the impact of production cuts recently implemented by OPEC +. The downgrade follows DBRS Morningstar’s expectation that the Company’s key credit metrics will remain below the threshold for a BBB rating over the next three years under the revised commodity price assumptions (see DBRS Morningstar’s May 15, 2020, commentary titled “As Coronavirus Lockdowns Ease, DBRS Morningstar Resets Outlook for Oil and Natural Gas Prices”). The Negative trend reflects the dependence of the key credit metrics on higher commodity prices, especially in 2022 to support the current rating.

And now it’s time for PrefLetter!

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TXPR closed at 523.86, down 2.37% on the day. Volume today was 2.88-million, second-highest of the past thirty days, behind only June 5.

CPD closed at 10.45, down 2.06% on the day. Volume was 403,246, highest of the past 30 trading days and well ahead of second-place June 9.

ZPR closed at 8.16, down 2.16% on the day. Volume of 3,559,908 was by far the highest of the past 30 trading days, over three times the volume of second-place June 5.

Five-year Canada yields were down 2bp at 0.37% today.

Tim Shufelt comments in the Globe:

Global stock markets buckled on Thursday amid fears of a resurgence of COVID-19 infections in the United States, which could put the budding economic recovery in peril.

It was the worst day for North American stocks since the depths of the market crash in March, with the S&P/TSX Composite Index losing 4.1 per cent on the day, while the S&P 500 index dropped 5.9 per cent.

The dip followed a sobering reminder from the U.S. Federal Reserve on Wednesday about the monumental economic challenges that lie ahead, particularly as several U.S. states brace for the pandemic’s potential second wave.
…
The latest outlooks for the global economy are also distinctly negative. This week, the OECD said it expects a 6-per-cent drop in global GDP in 2020, and an 8-per-cent decline in the Canadian economy, exceeding in severity economists’ consensus for the recession on both counts.

In keeping with heightened growth fears, economically sensitive stocks were dealt a heavy blow on Thursday. The S&P/TSX Capped Energy Index dropped by 9.8 per cent, effectively wiping out the gains realized through a solid run in early June.
…
On Wednesday, the U.S. hit two million confirmed COVID-19 cases, according to Johns Hopkins University. In nearly half of U.S. states, many of which were among the earliest to reopen their economies, infections are on the rise, according to an Associated Press analysis.

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TXPR closed at 536.59, down 0.62% on the day. Volume today was 2.36-million, well above the median of the past thirty days

CPD closed at 10.67, down 0.56% on the day. Volume was 223,221, fourth-highest of the past 30 trading days.

ZPR closed at 8.34, down 0.83% on the day. Volume of 559,175 was second-highest of the past 30 trading days, behind only June 5.

Five-year Canada yields were down 6bp at 0.39% today.

The Fed released its FOMC Statement:

The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.

The coronavirus outbreak is causing tremendous human and economic hardship across the United States and around the world. The virus and the measures taken to protect public health have induced sharp declines in economic activity and a surge in job losses. Weaker demand and significantly lower oil prices are holding down consumer price inflation. Financial conditions have improved, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.

The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term. In light of these developments, the Committee decided to maintain the target range for the federal funds rate at 0 to 1/4 percent. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.

The Committee will continue to monitor the implications of incoming information for the economic outlook, including information related to public health, as well as global developments and muted inflation pressures, and will use its tools and act as appropriate to support the economy. In determining the timing and size of future adjustments to the stance of monetary policy, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

To support the flow of credit to households and businesses, over coming months the Federal Reserve will increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities at least at the current pace to sustain smooth market functioning, thereby fostering effective transmission of monetary policy to broader financial conditions. In addition, the Open Market Desk will continue to offer large-scale overnight and term repurchase agreement operations. The Committee will closely monitor developments and is prepared to adjust its plans as appropriate.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Patrick Harker; Robert S. Kaplan; Neel Kashkari; Loretta J. Mester; and Randal K. Quarles.

Of interest is the dot plot of expectations:

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… and the related projection of a slow recovery:

In their first economic projections this year, Fed officials indicated that they expected the unemployment rate to end 2020 at 9.3 percent and remain elevated for years, coming in at 5.5 percent in 2022, The New York Times’s Jeanna Smialek reports. Output is expected to be 6.5 percent lower at the end of this year than it was in the final quarter of 2019.

“Nearly 20 million jobs have been lost on net since February,” the Fed chair, Jerome H. Powell, said at a news conference following the release of the forecast, and noted that the figure probably understates the extent of unemployment. “The downturn has not fallen equally on all Americans.”

The new forecasts predict a much slower path back to economic strength than the Trump administration — and perhaps the stock market — seems to expect as the economy climbs out of a virus-spurred downturn. The Fed skipped its quarterly economic summary in March as the pandemic gripped the United States, sowing uncertainty as business activity came to a near standstill.

PerpetualDiscounts now yield 5.25% 5.72%, equivalent to 6.82% 7.44% interest at the standard equivalency factor of 1.3x. Long corporates now yield 3.28%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has narrowed dramatically significantly to 355bp 415bp from the 430bp reported June 3.