A day like today needs a little light relief; it seems that the Big Banks’ darling Visa is shocked, shocked, that:
“They [Walmart] are using their size and scale to give themselves an unfair advantage,” it says.
I’ll tell you guys one thing … once some fintech company comes up with a payment mechanism that is reasonably widespread and cheap, I’ll start taking it for PrefLetter. The day can’t come soon enough!
Another good joke – although rather old and too frequently told – is investors’ return expectations:
The average expectation in a recent survey: 9.1 percent. Americans and millennials set the bar highest, at 11.1 percent and 10.2 percent, respectively.
The average stock market yield globally: 3.8 percent. And benchmark interest rates in major developed markets are at 0.5 percent or lower—or negative.
The expectations of financial advisers also appear high, according to the new global investor study by asset manager Schroders. The study, which surveyed 20,000 investors across 28 countries, found that advisers around the globe wanted to generate a minimum of 7.9 percent a year for clients—lower than what the investors wanted but still high given the low interest rates. U.S advisers cited 5 percent as their target for annual investment income.
There’s been a lot of noise lately about housing prices in Vancouver and Toronto; foreign money has come in for a great deal of opprobrium; low mortgage rates and easy credit also take a lot of blame. I contend that another culprit is the lousy returns and extreme volatility experienced in the markets since the turn of the century – why invest in the stock market when you can buy a house? We won’t get rid of that attitude until we see a lot more underwater mortgages … which, unlike American mortgages, have recourse to the borrower.
As noted by Assiduous Reader prefobsessed in the comments to June 15, the day began with a sharp decline of over 2% for TXPR. There was a significant recovery, but the market still ended the day down a lot. As far as I can make out, this resulted from a sharp decline in Treasury yields:
Treasury 10-year note yields fell five basis points to 1.524 percent as of 10:02 a.m. in New York, the lowest level since August 2012, according to Bloomberg Bond Trader data.
This decline was was subsequently reversed:
Treasuries erased gains after 10-year note yields touched the lowest level since 2012, amid shifting bets on the outcome of next week’s U.K. vote on membership in the European Union.
Benchmark 10-year note yields climbed after a U.K. Labor Party lawmaker was killed Thursday, leading to a suspension of campaigning before the June 23 Brexit referendum. Treasuries had gained as part of a rally in global government securities that pushed benchmark 10-year yields in Germany and Japan further below zero.
Demand for Treasuries rose after Federal Reserve Chair Janet Yellen on Wednesday said slow productivity growth and aging societies may depress interest rates, and also cited the risk of Brexit as a reason to keep rates steady. Polls in recent days have shown the “Leave” camp leading. The Guardian newspaper reported police are investigating reports saying the suspect in the U.K. incident had shouted “Britain First,” the name of a group that campaigns against immigration and membership in the EU.
… but nobody told the Canadian preferred share market:
Click for Big
The GOC-5 closed at 0.57% and who knows? Maybe we’re back to the days when all changes in GOC-5 would be reflected in FixedReset prices (with a high negative duration!) as the market attempts to keep yields constant … which makes no sense, but since when is the preferred share market supposed to make sense?
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
|||||||
| Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
| Ratchet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.8570 % | 1,631.5 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.8570 % | 2,980.3 |
| Floater | 4.71 % | 4.71 % | 62,068 | 16.04 | 3 | -0.8570 % | 1,717.6 |
| OpRet | 4.87 % | 1.02 % | 40,975 | 0.08 | 1 | -0.0795 % | 2,829.0 |
| SplitShare | 4.89 % | 5.03 % | 87,980 | 4.66 | 7 | -0.2302 % | 3,332.8 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.2302 % | 2,600.3 |
| Perpetual-Premium | 5.62 % | 4.07 % | 76,180 | 0.09 | 9 | -0.1782 % | 2,617.1 |
| Perpetual-Discount | 5.40 % | 5.48 % | 106,124 | 14.62 | 28 | -0.5712 % | 2,715.9 |
| FixedReset | 5.29 % | 4.78 % | 161,232 | 7.36 | 88 | -1.9023 % | 1,934.6 |
| Deemed-Retractible | 5.14 % | 5.37 % | 125,830 | 4.93 | 33 | -0.2980 % | 2,691.6 |
| FloatingReset | 3.19 % | 5.20 % | 27,399 | 5.20 | 17 | -0.8554 % | 2,079.2 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| PWF.PR.Q | FloatingReset | -8.00 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 11.50 Evaluated at bid price : 11.50 Bid-YTW : 4.69 % |
| IAG.PR.G | FixedReset | -5.76 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 18.50 Bid-YTW : 7.75 % |
| HSE.PR.C | FixedReset | -4.14 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 17.59 Evaluated at bid price : 17.59 Bid-YTW : 5.55 % |
| PWF.PR.T | FixedReset | -3.81 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 20.20 Evaluated at bid price : 20.20 Bid-YTW : 3.94 % |
| TD.PF.A | FixedReset | -3.70 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 17.96 Evaluated at bid price : 17.96 Bid-YTW : 4.28 % |
| IFC.PR.C | FixedReset | -3.70 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 16.66 Bid-YTW : 8.89 % |
| BMO.PR.T | FixedReset | -3.65 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 17.69 Evaluated at bid price : 17.69 Bid-YTW : 4.29 % |
| CM.PR.Q | FixedReset | -3.64 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 19.05 Evaluated at bid price : 19.05 Bid-YTW : 4.57 % |
| CM.PR.P | FixedReset | -3.60 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 17.65 Evaluated at bid price : 17.65 Bid-YTW : 4.34 % |
| BMO.PR.S | FixedReset | -3.58 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 18.03 Evaluated at bid price : 18.03 Bid-YTW : 4.32 % |
| CM.PR.O | FixedReset | -3.58 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 18.05 Evaluated at bid price : 18.05 Bid-YTW : 4.34 % |
| MFC.PR.M | FixedReset | -3.58 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 18.32 Bid-YTW : 7.72 % |
| SLF.PR.I | FixedReset | -3.58 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 17.80 Bid-YTW : 8.12 % |
| BMO.PR.W | FixedReset | -3.56 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 17.60 Evaluated at bid price : 17.60 Bid-YTW : 4.28 % |
| SLF.PR.G | FixedReset | -3.48 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 13.85 Bid-YTW : 10.00 % |
| TD.PF.B | FixedReset | -3.42 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 17.80 Evaluated at bid price : 17.80 Bid-YTW : 4.31 % |
| MFC.PR.L | FixedReset | -3.41 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 17.58 Bid-YTW : 8.09 % |
| TD.PF.C | FixedReset | -3.39 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 17.68 Evaluated at bid price : 17.68 Bid-YTW : 4.34 % |
| NA.PR.W | FixedReset | -3.35 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 17.00 Evaluated at bid price : 17.00 Bid-YTW : 4.53 % |
| HSE.PR.A | FixedReset | -3.21 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 11.44 Evaluated at bid price : 11.44 Bid-YTW : 5.14 % |
| TD.PF.D | FixedReset | -3.21 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 19.30 Evaluated at bid price : 19.30 Bid-YTW : 4.51 % |
| BAM.PR.R | FixedReset | -3.17 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 14.06 Evaluated at bid price : 14.06 Bid-YTW : 5.17 % |
| BAM.PR.T | FixedReset | -3.16 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 14.38 Evaluated at bid price : 14.38 Bid-YTW : 5.20 % |
| TD.PF.E | FixedReset | -3.14 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 20.02 Evaluated at bid price : 20.02 Bid-YTW : 4.45 % |
| FTS.PR.H | FixedReset | -3.11 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 13.40 Evaluated at bid price : 13.40 Bid-YTW : 4.01 % |
| MFC.PR.N | FixedReset | -3.02 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 18.29 Bid-YTW : 7.68 % |
| HSE.PR.G | FixedReset | -2.99 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 19.50 Evaluated at bid price : 19.50 Bid-YTW : 5.44 % |
| MFC.PR.K | FixedReset | -2.92 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 16.96 Bid-YTW : 8.47 % |
| FTS.PR.M | FixedReset | -2.89 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 18.50 Evaluated at bid price : 18.50 Bid-YTW : 4.44 % |
| MFC.PR.J | FixedReset | -2.88 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 18.56 Bid-YTW : 7.53 % |
| BMO.PR.Y | FixedReset | -2.83 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 19.60 Evaluated at bid price : 19.60 Bid-YTW : 4.39 % |
| BNS.PR.Z | FixedReset | -2.83 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 19.60 Bid-YTW : 6.81 % |
| RY.PR.H | FixedReset | -2.82 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 17.91 Evaluated at bid price : 17.91 Bid-YTW : 4.26 % |
| BAM.PF.G | FixedReset | -2.75 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 19.13 Evaluated at bid price : 19.13 Bid-YTW : 4.80 % |
| BAM.PF.F | FixedReset | -2.68 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 18.86 Evaluated at bid price : 18.86 Bid-YTW : 4.84 % |
| TRP.PR.A | FixedReset | -2.64 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 14.41 Evaluated at bid price : 14.41 Bid-YTW : 4.63 % |
| MFC.PR.F | FixedReset | -2.56 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 12.96 Bid-YTW : 10.74 % |
| TRP.PR.F | FloatingReset | -2.53 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 13.50 Evaluated at bid price : 13.50 Bid-YTW : 4.54 % |
| BNS.PR.Y | FixedReset | -2.49 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 19.60 Bid-YTW : 6.45 % |
| SLF.PR.J | FloatingReset | -2.47 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 12.25 Bid-YTW : 11.37 % |
| RY.PR.Z | FixedReset | -2.46 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 17.86 Evaluated at bid price : 17.86 Bid-YTW : 4.21 % |
| MFC.PR.G | FixedReset | -2.42 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 18.57 Bid-YTW : 7.70 % |
| MFC.PR.I | FixedReset | -2.40 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 19.52 Bid-YTW : 7.06 % |
| BAM.PF.B | FixedReset | -2.36 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 16.93 Evaluated at bid price : 16.93 Bid-YTW : 5.02 % |
| TRP.PR.D | FixedReset | -2.23 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 17.11 Evaluated at bid price : 17.11 Bid-YTW : 4.64 % |
| BAM.PF.E | FixedReset | -2.21 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 17.69 Evaluated at bid price : 17.69 Bid-YTW : 4.84 % |
| BAM.PF.A | FixedReset | -2.19 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 18.27 Evaluated at bid price : 18.27 Bid-YTW : 4.97 % |
| RY.PR.I | FixedReset | -2.18 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.84 Bid-YTW : 4.85 % |
| TRP.PR.H | FloatingReset | -2.18 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 9.88 Evaluated at bid price : 9.88 Bid-YTW : 4.58 % |
| GWO.PR.N | FixedReset | -2.14 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 13.70 Bid-YTW : 10.04 % |
| RY.PR.J | FixedReset | -2.10 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 18.65 Evaluated at bid price : 18.65 Bid-YTW : 4.58 % |
| NA.PR.S | FixedReset | -2.10 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 17.74 Evaluated at bid price : 17.74 Bid-YTW : 4.51 % |
| NA.PR.Q | FixedReset | -2.07 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.21 Bid-YTW : 4.78 % |
| IFC.PR.A | FixedReset | -2.01 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 14.12 Bid-YTW : 10.63 % |
| PWF.PR.P | FixedReset | -1.96 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 12.51 Evaluated at bid price : 12.51 Bid-YTW : 4.50 % |
| BAM.PR.M | Perpetual-Discount | -1.96 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 20.55 Evaluated at bid price : 20.55 Bid-YTW : 5.80 % |
| TRP.PR.C | FixedReset | -1.91 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 11.80 Evaluated at bid price : 11.80 Bid-YTW : 4.65 % |
| BAM.PR.N | Perpetual-Discount | -1.82 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 20.55 Evaluated at bid price : 20.55 Bid-YTW : 5.80 % |
| RY.PR.M | FixedReset | -1.80 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 18.51 Evaluated at bid price : 18.51 Bid-YTW : 4.50 % |
| TRP.PR.G | FixedReset | -1.79 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 18.68 Evaluated at bid price : 18.68 Bid-YTW : 4.87 % |
| HSE.PR.E | FixedReset | -1.78 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 19.35 Evaluated at bid price : 19.35 Bid-YTW : 5.50 % |
| FTS.PR.K | FixedReset | -1.69 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 16.90 Evaluated at bid price : 16.90 Bid-YTW : 4.22 % |
| TRP.PR.I | FloatingReset | -1.68 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 11.70 Evaluated at bid price : 11.70 Bid-YTW : 4.47 % |
| SLF.PR.H | FixedReset | -1.66 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 15.40 Bid-YTW : 9.37 % |
| TD.PR.S | FixedReset | -1.65 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.72 Bid-YTW : 4.64 % |
| BAM.PF.D | Perpetual-Discount | -1.62 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 21.22 Evaluated at bid price : 21.22 Bid-YTW : 5.80 % |
| BAM.PF.C | Perpetual-Discount | -1.59 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 21.02 Evaluated at bid price : 21.02 Bid-YTW : 5.79 % |
| GWO.PR.O | FloatingReset | -1.54 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 12.80 Bid-YTW : 10.60 % |
| BNS.PR.R | FixedReset | -1.50 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.94 Bid-YTW : 4.90 % |
| FTS.PR.I | FloatingReset | -1.43 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 11.68 Evaluated at bid price : 11.68 Bid-YTW : 4.27 % |
| BMO.PR.M | FixedReset | -1.39 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.73 Bid-YTW : 4.61 % |
| CU.PR.I | FixedReset | -1.36 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2020-12-01 Maturity Price : 25.00 Evaluated at bid price : 25.45 Bid-YTW : 4.12 % |
| TRP.PR.B | FixedReset | -1.31 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 11.28 Evaluated at bid price : 11.28 Bid-YTW : 4.29 % |
| BAM.PR.K | Floater | -1.28 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 10.03 Evaluated at bid price : 10.03 Bid-YTW : 4.71 % |
| BAM.PR.Z | FixedReset | -1.20 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 18.17 Evaluated at bid price : 18.17 Bid-YTW : 5.07 % |
| TRP.PR.E | FixedReset | -1.16 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 17.82 Evaluated at bid price : 17.82 Bid-YTW : 4.52 % |
| FTS.PR.G | FixedReset | -1.14 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 16.50 Evaluated at bid price : 16.50 Bid-YTW : 4.36 % |
| BNS.PR.Q | FixedReset | -1.05 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.70 Bid-YTW : 4.83 % |
| TD.PR.T | FloatingReset | -1.02 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.39 Bid-YTW : 5.19 % |
| BIP.PR.B | FixedReset | 1.00 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2020-12-31 Maturity Price : 25.00 Evaluated at bid price : 25.20 Bid-YTW : 5.28 % |
| CU.PR.C | FixedReset | 1.15 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 16.74 Evaluated at bid price : 16.74 Bid-YTW : 4.57 % |
| BNS.PR.F | FloatingReset | 2.78 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 18.51 Bid-YTW : 7.71 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| NA.PR.A | FixedReset | 145,728 | YTW SCENARIO Maturity Type : Call Maturity Date : 2021-08-15 Maturity Price : 25.00 Evaluated at bid price : 25.44 Bid-YTW : 5.05 % |
| TRP.PR.D | FixedReset | 108,413 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 17.11 Evaluated at bid price : 17.11 Bid-YTW : 4.64 % |
| TRP.PR.J | FixedReset | 100,899 | YTW SCENARIO Maturity Type : Call Maturity Date : 2021-05-31 Maturity Price : 25.00 Evaluated at bid price : 25.75 Bid-YTW : 4.90 % |
| RY.PR.Q | FixedReset | 55,477 | YTW SCENARIO Maturity Type : Call Maturity Date : 2021-05-24 Maturity Price : 25.00 Evaluated at bid price : 26.22 Bid-YTW : 4.49 % |
| MFC.PR.O | FixedReset | 51,974 | YTW SCENARIO Maturity Type : Call Maturity Date : 2021-06-19 Maturity Price : 25.00 Evaluated at bid price : 26.25 Bid-YTW : 4.50 % |
| RY.PR.Z | FixedReset | 47,516 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-06-16 Maturity Price : 17.86 Evaluated at bid price : 17.86 Bid-YTW : 4.21 % |
| There were 84 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| TRP.PR.A | FixedReset | Quote: 14.41 – 15.31 Spot Rate : 0.9000 Average : 0.5903 YTW SCENARIO |
| SLF.PR.I | FixedReset | Quote: 17.80 – 18.39 Spot Rate : 0.5900 Average : 0.4043 YTW SCENARIO |
| SLF.PR.G | FixedReset | Quote: 13.85 – 14.30 Spot Rate : 0.4500 Average : 0.2817 YTW SCENARIO |
| BNS.PR.R | FixedReset | Quote: 22.94 – 23.38 Spot Rate : 0.4400 Average : 0.2873 YTW SCENARIO |
| FTS.PR.M | FixedReset | Quote: 18.50 – 19.05 Spot Rate : 0.5500 Average : 0.4070 YTW SCENARIO |
| SLF.PR.H | FixedReset | Quote: 15.40 – 15.90 Spot Rate : 0.5000 Average : 0.3617 YTW SCENARIO |
People in Vancouver seem to believe that real estate prices will continue going up forever. I was told in all seriousness by an acquaintance that real estate prices in Vancouver will never go down because foreign investors would refuse to sell if they didn’t get the price they wanted. If only investing were so simple.
I would estimate that people buying real estate in Vancouver for investment (not to live in) will be lucky to get a 3% return. Obviously they are counting on capital gains to make the investment worthwhile. I’ve talked to several people who were planning on buying real estate for investment, none of them had any idea what a preferred share is.
There are many warnings signs that this is an overheated market. Prices are rising so quickly (8% over the last month for single family homes) that people are afraid accept an offer on their house before making an offer on another house. They worry that if it takes them a few weeks to find a house to buy, they will be priced out of the market. So they make a “no subjects” offer on the house they want to buy and then they put their own house up for sale.
We have seen what happens when the foreign investor changes their mind. Just look at Chinese A-Shares, their rebar market, or egg futures just in the last year. Real estate is a slower moving market, but if the catalyst on the marginal purchase really is foreign capital, we will see the same type of move as the assets mentioned.
I was told in all seriousness by an acquaintance that real estate prices in Vancouver will never go down
An infallible bubble indicator!
I would estimate that people buying real estate in Vancouver for investment (not to live in) will be lucky to get a 3% return.
That’s still in excess of inflation; and it’s not clear whether you’re including upkeep and taxes in the cost. I suspect that total returns over the next ten years will be negative – but it takes two to make a market! Pricking the bubble will require a sustained increase in mortgage rates … 2018? 2019?
if the catalyst on the marginal purchase really is foreign capital
I agree that foreign capital is a factor, but I’m not sure if it’s the dominant one. There’s a lot of mortgage debt outstanding in Vancouver … and while foreign demand can have a big marginal effect, it’s domestic demand that is the bread and butter of a real-estate boom.
I also think that foreign demand isn’t the major cause of high real prices in Vancouver. What I think it does is provide an simplistic and for some people, comforting explanation for high prices. Surely prices can’t be too high if all these rich and money savvy foreigners keep buying.
I agree that my estimate of 3% was very optimistic. Real estate agents often provide buyers who are interested in an investment property with a very simplistic spreadsheet of expected returns that leaves out lots of costs. One big cost that investors don’t account for is depreciation – not only is a 30 year old apartment worth less than a 20 year old one but eventually it will require some renovations.