PrefBlog

It appears that anybody who doesn’t like the idea of negative interest rates is an enemy of the people:

U.S. President Donald Trump on Wednesday called on the “boneheads” at the Federal Reserve to push interest rates down into negative territory, a move reluctantly used by other world central banks to battle weak economic growth that risks punishing savers and banks’ earnings in the process.

Trump, in a pair of Twitter posts, said negative rates would save the government money on its debt, which including Social Security accounts has reached a record $22 trillion on Trump’s watch.

“It is only the naïveté of (Fed Chairman) Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing,” added Trump, who has repeatedly noted that rates are negative in Germany, Europe’s trading powerhouse.

Pew Research has a nice page on the US federal debt:

Net interest payments on the debt are estimated to total $393.5 billion this fiscal year, or 8.7% of all federal outlays. (The government projects it will pay out a total of $593.1 billion in interest in fiscal 2019, which ends Sept. 30, but that includes interest credited to Social Security and other government trust funds.) By comparison, debt service was more than 15% of federal outlays in the mid-1990s. The share has fallen partly because lower rates have held down interest payments, but also because outlays have risen substantially, up about 29% over the past decade.

Rent control has come to California! I started reading the article prepared to hate the idea, but they’ve actually done a reasonable job:

California lawmakers approved a statewide rent cap on Wednesday covering millions of tenants, the biggest step yet in a surge of initiatives to address an affordable-housing crunch nationwide.

The bill limits annual rent increases to 5 percent after inflation and offers new barriers to eviction, providing a bit of housing security in a state with the nation’s highest housing prices and a swelling homeless population.
…
In February, Oregon lawmakers became the first to pass statewide rent control, limiting increases to 7 percent annually plus inflation.
…
Economists from both the left and the right have a well-established aversion to rent control, arguing that such policies ignore the message of rising prices, which is to build more housing. Studies in San Francisco and elsewhere show that price caps often prompt landlords to abandon the rental business by converting their units to owner-occupied homes. And since rent controls typically have no income threshold, they have been faulted for benefiting high-income tenants.
…
But many of the same studies show that rent-control policies have been effective at shielding tenants from evictions and sudden rent increases, particularly the lower-income and older tenants who are at a high risk of becoming homeless.

Allowing increases in excess of inflation gives comfort to landlords that they will, eventually, be able to charge the tenant the market rate, while protecting the tenant from ludicrous increases. Avoiding the dislocation inherent in the face of extortionate increases and allowing tenants to plan is a public good that is worth money, even though it is assigned zero value in the disapproving studies.

PerpetualDiscounts now yield 5.63%, equivalent to 7.32% interest at the standard equivalency factor of 1.3x. Long corporates now yield 3.17%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has remains at 415bp (where it was on September 4, close to the post-Credit Crunch record of 420bp set August 28. The latter value is second only to the 445bp recorded November 26, 2008, a day on which

The TXPR index was down 5.94% on the BCE news.

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	-0.1335 %	1,938.2
FixedFloater	0.00 %	0.00 %	0	0.00	0	-0.1335 %	3,556.5
Floater	6.16 %	6.33 %	52,661	13.31	4	-0.1335 %	2,049.6
OpRet	0.00 %	0.00 %	0	0.00	0	0.0395 %	3,381.6
SplitShare	4.66 %	4.51 %	63,395	4.04	7	0.0395 %	4,038.4
Interest-Bearing	0.00 %	0.00 %	0	0.00	0	0.0395 %	3,150.9
Perpetual-Premium	5.61 %	-18.19 %	60,474	0.09	6	0.0716 %	2,983.9
Perpetual-Discount	5.46 %	5.63 %	65,354	14.40	28	0.0763 %	3,129.8
FixedReset Disc	5.52 %	5.39 %	175,023	14.54	73	-0.0759 %	2,073.5
Deemed-Retractible	5.28 %	5.95 %	76,944	7.90	27	0.1838 %	3,116.8
FloatingReset	4.49 %	6.63 %	60,331	8.04	3	0.1378 %	2,353.5
FixedReset Prem	5.25 %	3.95 %	132,524	1.62	14	-0.0279 %	2,579.3
FixedReset Bank Non	1.97 %	4.20 %	89,740	2.31	3	0.1251 %	2,663.6
FixedReset Ins Non	5.46 %	7.90 %	102,074	7.95	21	-0.0885 %	2,111.2

Performance Highlights
Issue	Index	Change	Notes
TRP.PR.G	FixedReset Disc	-3.59 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-11 Maturity Price : 17.21 Evaluated at bid price : 17.21 Bid-YTW : 6.28 %
NA.PR.C	FixedReset Disc	-1.65 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-11 Maturity Price : 20.90 Evaluated at bid price : 20.90 Bid-YTW : 5.72 %
MFC.PR.H	FixedReset Ins Non	-1.26 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.45 Bid-YTW : 6.95 %
TRP.PR.C	FixedReset Disc	-1.26 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-11 Maturity Price : 11.80 Evaluated at bid price : 11.80 Bid-YTW : 6.12 %
BMO.PR.E	FixedReset Disc	-1.22 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-11 Maturity Price : 20.16 Evaluated at bid price : 20.16 Bid-YTW : 5.30 %
CM.PR.Q	FixedReset Disc	1.09 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-11 Maturity Price : 18.50 Evaluated at bid price : 18.50 Bid-YTW : 5.64 %
BAM.PR.R	FixedReset Disc	1.17 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-11 Maturity Price : 14.76 Evaluated at bid price : 14.76 Bid-YTW : 6.20 %
HSE.PR.C	FixedReset Disc	1.17 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-11 Maturity Price : 16.39 Evaluated at bid price : 16.39 Bid-YTW : 6.88 %
BAM.PR.B	Floater	1.18 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-11 Maturity Price : 11.15 Evaluated at bid price : 11.15 Bid-YTW : 6.33 %
BIP.PR.A	FixedReset Disc	1.18 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-11 Maturity Price : 18.01 Evaluated at bid price : 18.01 Bid-YTW : 6.84 %
BAM.PR.X	FixedReset Disc	2.11 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-11 Maturity Price : 13.06 Evaluated at bid price : 13.06 Bid-YTW : 6.03 %

Volume Highlights
Issue	Index	Shares Traded	Notes
TRP.PR.K	FixedReset Disc	271,158	YTW SCENARIO Maturity Type : Call Maturity Date : 2022-05-31 Maturity Price : 25.00 Evaluated at bid price : 25.08 Bid-YTW : 4.86 %
TRP.PR.E	FixedReset Disc	190,743	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-11 Maturity Price : 15.51 Evaluated at bid price : 15.51 Bid-YTW : 6.08 %
BAM.PR.T	FixedReset Disc	100,400	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-11 Maturity Price : 15.00 Evaluated at bid price : 15.00 Bid-YTW : 6.19 %
BAM.PF.H	FixedReset Prem	81,120	YTW SCENARIO Maturity Type : Call Maturity Date : 2020-12-31 Maturity Price : 25.00 Evaluated at bid price : 25.38 Bid-YTW : 4.60 %
BAM.PR.R	FixedReset Disc	77,660	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-11 Maturity Price : 14.76 Evaluated at bid price : 14.76 Bid-YTW : 6.20 %
MFC.PR.N	FixedReset Ins Non	52,377	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 15.84 Bid-YTW : 9.26 %
There were 43 other index-included issues trading in excess of 10,000 shares.

Wide Spread Highlights
Issue	Index	Quote Data and Yield Notes
TRP.PR.G	FixedReset Disc	Quote: 17.21 – 17.80 Spot Rate : 0.5900 Average : 0.3981 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-11 Maturity Price : 17.21 Evaluated at bid price : 17.21 Bid-YTW : 6.28 %
IFC.PR.E	Deemed-Retractible	Quote: 23.90 – 24.23 Spot Rate : 0.3300 Average : 0.2136 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.90 Bid-YTW : 5.95 %
W.PR.K	FixedReset Prem	Quote: 25.31 – 25.82 Spot Rate : 0.5100 Average : 0.4031 YTW SCENARIO Maturity Type : Call Maturity Date : 2021-01-15 Maturity Price : 25.00 Evaluated at bid price : 25.31 Bid-YTW : 4.95 %
BAM.PF.J	FixedReset Disc	Quote: 23.70 – 24.00 Spot Rate : 0.3000 Average : 0.1960 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-11 Maturity Price : 22.79 Evaluated at bid price : 23.70 Bid-YTW : 5.05 %
SLF.PR.B	Deemed-Retractible	Quote: 21.96 – 22.35 Spot Rate : 0.3900 Average : 0.3009 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.96 Bid-YTW : 6.43 %
SLF.PR.A	Deemed-Retractible	Quote: 21.72 – 22.00 Spot Rate : 0.2800 Average : 0.2164 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.72 Bid-YTW : 6.51 %

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