Most central banks cherish their independence; the Bank of Canada is not so defiant:
The Bank of Canada is facing a series of emerging risks that could make monetary policy less effective when the next shock hits, deputy governor Lawrence Schembri warned in a speech Thursday to the Manitoba Association for Business Economists.
Higher levels of household and government debt, a long-term decline in interest rates and slow growth are all making the job of central banks more difficult, Mr. Schembri pointed out. Real – or after-inflation – interest rates have slumped to near zero from more than 6 per cent in the early 1990s.
Among the options on the table to strengthen the bank’s “monetary policy framework” is to have “more explicit” co-ordination of interest rate moves with government spending plans, he said.
“The experience during the crisis, when both aggressive monetary and fiscal stimulus were used, highlighted the benefits of simultaneous policy action,” Mr. Schembri explained.
…
Mr. Schembri acknowledged, however, that the prospect of the independent central bank working more closely with the federal government raises “governance issues” for both Ottawa and the bank.
James Coyne is spinning in his grave. Surprisingly, his obituary provides a better description of ‘The Coyne Affair’ than Wikipedia.
All good things come from conflict. In Canada, we have conflict between the government and the opposition; between the Commons and Senate; between the feds and the provinces; between the politicians and the judiciary; lots of conflict, albeit less dramatic than the more formalized conflict of the States. The country needs conflict, lots of it, between the government and the central bank: the Coyne Affair was an excellent example of this. It is very sad that Coyne’s defining contribution to the country’s welfare was not mentioned in Schembri’s speech.
Oh, well. At least some Canadian traditions continue:
A shortage of rail cars in Canada is leaving grain and oil shipments stranded on the Prairies, sending crude prices plummeting and leaving farmers in a cash crunch.
The nation’s biggest railways haven’t been able to deliver enough cars after harsh winter conditions and as a sudden boom in energy production sparked a swell of demand. Some farmers have been waiting for months to deliver wheat and canola to elevators before they can get paid. The squeeze also means that crude supplies are piling up in Alberta, pushing prices to the biggest discount relative to New York futures in more than four years.
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
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| 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 | -0.0140 % | 2,938.6 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0140 % | 5,392.2 |
| Floater | 3.38 % | 3.58 % | 75,829 | 18.29 | 4 | -0.0140 % | 3,107.5 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1794 % | 3,137.2 |
| SplitShare | 4.68 % | 4.60 % | 62,853 | 4.10 | 5 | -0.1794 % | 3,746.4 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1794 % | 2,923.1 |
| Perpetual-Premium | 5.44 % | 4.92 % | 67,060 | 14.28 | 20 | -0.0956 % | 2,833.9 |
| Perpetual-Discount | 5.40 % | 5.36 % | 84,124 | 14.83 | 14 | -0.2020 % | 2,945.2 |
| FixedReset | 4.24 % | 4.55 % | 156,988 | 4.26 | 101 | 0.0976 % | 2,521.0 |
| Deemed-Retractible | 5.14 % | 5.69 % | 92,596 | 5.75 | 28 | -0.0931 % | 2,908.4 |
| FloatingReset | 3.08 % | 3.07 % | 37,738 | 3.73 | 10 | 0.2528 % | 2,764.6 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| MFC.PR.C | Deemed-Retractible | -1.66 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.29 Bid-YTW : 7.45 % |
| PVS.PR.F | SplitShare | -1.17 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2024-09-30 Maturity Price : 25.00 Evaluated at bid price : 25.40 Bid-YTW : 4.71 % |
| BAM.PR.R | FixedReset | 1.20 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2048-02-15 Maturity Price : 21.05 Evaluated at bid price : 21.05 Bid-YTW : 4.94 % |
| BAM.PR.X | FixedReset | 1.38 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2048-02-15 Maturity Price : 18.40 Evaluated at bid price : 18.40 Bid-YTW : 4.94 % |
| TRP.PR.H | FloatingReset | 1.70 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2048-02-15 Maturity Price : 17.35 Evaluated at bid price : 17.35 Bid-YTW : 3.64 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| RY.PR.R | FixedReset | 284,419 | YTW SCENARIO Maturity Type : Call Maturity Date : 2021-08-24 Maturity Price : 25.00 Evaluated at bid price : 26.44 Bid-YTW : 3.73 % |
| BNS.PR.Q | FixedReset | 169,243 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.98 Bid-YTW : 3.83 % |
| TD.PR.S | FixedReset | 157,774 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.92 Bid-YTW : 3.77 % |
| PWF.PR.A | Floater | 68,784 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2048-02-15 Maturity Price : 20.45 Evaluated at bid price : 20.45 Bid-YTW : 2.95 % |
| MFC.PR.H | FixedReset | 51,000 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.00 Bid-YTW : 5.36 % |
| SLF.PR.E | Deemed-Retractible | 44,800 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.50 Bid-YTW : 7.24 % |
| There were 36 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| BIP.PR.D | FixedReset | Quote: 25.18 – 25.49 Spot Rate : 0.3100 Average : 0.1799 YTW SCENARIO |
| TRP.PR.G | FixedReset | Quote: 24.07 – 24.60 Spot Rate : 0.5300 Average : 0.4023 YTW SCENARIO |
| MFC.PR.C | Deemed-Retractible | Quote: 21.29 – 21.70 Spot Rate : 0.4100 Average : 0.2887 YTW SCENARIO |
| PWF.PR.O | Perpetual-Premium | Quote: 25.39 – 25.68 Spot Rate : 0.2900 Average : 0.1892 YTW SCENARIO |
| PWF.PR.L | Perpetual-Discount | Quote: 23.40 – 23.75 Spot Rate : 0.3500 Average : 0.2494 YTW SCENARIO |
| CU.PR.I | FixedReset | Quote: 25.43 – 25.80 Spot Rate : 0.3700 Average : 0.2721 YTW SCENARIO |