PrefBlog

US inflation came in hot:

U.S. inflation remained elevated last month, underscoring the need for the Federal Reserve to raise interest rates again this year.

Overall prices rose 0.4 percent in October after a 0.6 percent jump in September, according to the latest Consumer Price Index report from the Bureau of Labor Statistics. “Core” prices, which strip out volatile food and energy items, rose 0.3 percent.

The agency on Tuesday did not release year-over-year figures for October because it was unable to collect data during last year’s government shutdown. According to calculations by The New York Times, overall prices were around 4 percent higher compared with the same time last year, up from 3.7 percent in September. Over the same period, core prices rose about 2.8 percent.

One of the biggest drivers of inflation in October was food. Prices rose 0.5 percent last month and about 3 percent since the same time last year. That likely reflects a surge in energy prices, especially diesel prices, which have exploded costs for farmers.

Energy prices overall rose modestly in October and were up 0.7 percent for the month after a 5.2 percent jump in September. Gasoline prices rose 1 percent, significantly slower than the 9.1 percent increase during the previous period. Electricity prices rose nearly 1 percent.

October’s C.P.I. report was the last before the Fed meets for its final gathering of the year on Dec. 8-9. Policymakers have signaled that they will raise rates next month as they seek to stamp out price pressures that have pushed inflation further from their goal. While the Fed tracks C.P.I., it officially targets 2 percent inflation, as measured by the Personal Consumption Expenditures index. That level has been overshot for nearly six years.

Fed officials also watch the price of services as an indicator of the underlying pace of inflation. Specifically, they have been looking at core services excluding housing, a measure sometimes referred to as “supercore.” Those prices rose 0.4 percent in October, and have risen at an annual rate of nearly 5.5 percent over the past three months.

On Tuesday, Christopher J. Waller, a Fed governor, raised the prospects of a larger-than-usual half-point interest rate increase at the bank’s meeting in December if inflation did not show signs of moderating.

In remarks delivered at a Bank of England event, Mr. Waller said a quarter-point increase would suffice if price pressures improved. But if “core” inflation rose 0.3 percent or more, as October’s data showed, Mr. Waller warned that the Fed risked its credibility by not moving more aggressively. “Hiking only 25 basis points would put our credibility at risk, a risk I am not eager to take,” he said.

Two-year Treasury yields, which are sensitive to changes in interest rate expectations, were up over 0.1 percentage points on Tuesday to 4.67 percent as investors raised wagers that the Fed would raise rates more over time to quell inflation. The labor market remains in solid shape, as October’s report released on Friday showed, affirming that the Fed can focus solely on its inflation problem.

October marked the seventh straight month in which price increases outpaced wage growth on a 12-month basis. Average hourly earnings were up 3.1 percent in October from a year earlier, well below the roughly 4 percent annual inflation pace.

Here in the frozen north, five-year Canadas rocketted up from 3.38% at noon to 3.46% at the close.

The New York Fed published its Household Debt and Credit Report (Q3-2026):

Total Household Debt Expands Moderately; Aggregate Delinquency Rates Tick Up
Total household debt expanded by $334 billion, a 1.8 percent increase, to reach $19.1 trillion in the third quarter, according to the latest Quarterly Report on Household Debt and Credit. Aggregate delinquency rates worsened, with 5.0 percent of outstanding debt in some stage of delinquency, up 0.3 percentage points from the previous quarter. Transition into early delinquency continued to tick up for auto loans and mortgages but improved slightly for credit cards. Transition rates into serious delinquency slightly improved for credit cards and student loans, while those for auto loans and HELOCs remained flat. Mortgage balances rose by $257 billion in the third quarter and totaled $13.4 trillion at the end of September.

Looks like the buy-on-dips crowd hasn’t run out of money yet!

Each of the 11 major S&P 500 sector indexes rose on the session, with nine showing gains of more than 1% on Monday. Industrials and consumer discretionary were the top performers, rising more ​than 3% each.

Markets were in rally mode even ‌as Nvidia, the second-most valuable company in the world, tumbled 4.2% and closed at its lowest level since April 7. Investors questioned CEO Huang’s future at the AI chipmaker after an internal investigation into whether a foreign intelligence effort had targeted him.
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The S&P recorded its biggest daily percentage gain since April 8, while the Nasdaq marked its biggest daily advance since July 30.

The Dow Jones Industrial Average rose 1,104.02 points, or 2.15%, to 52,389.75, the S&P 500 gained 173.08 points, or 2.35%, to 7,549.94 ​and the Nasdaq Composite gained 673.71 points, or 2.74%, to 25,253.14.

The New York Fed published the October Survey of Consumer Expectations:

October Survey: Inflation Expectations Unchanged at Short-, Medium-, and Longer-Term Horizons; Labor Market Expectations Mixed

• Median inflation expectations were unchanged at the one-, three-, and five-year-ahead horizons at 3.9 percent, 3.3 percent, and 3.0 percent, respectively.
• Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—increased by 1.4 percentage points (ppt) to 45.3 percent, the highest reading since April 2020. The increase was driven by those without a college degree.
• The mean perceived probability of losing one’s job in the next twelve months increased by 0.4 ppt to 13.9 percent, remaining below its 12-month trailing average of 14.3 percent. The mean probability of leaving one’s job voluntarily in the next twelve months decreased by 0.5 percentage point to 19.4 percent, remaining above the series’ 12-month trailing average of 18.4 percent.
• The mean perceived probability of finding a job if one’s current job was lost increased by 0.4 ppt to 46.5 percent, the highest level since November 2025.

Brompton Group has announced (on 2026-11-2 as a correction to an initial try on 2026-10-29; it’s not yet referenced on their very difficult to find press release page, on which none of the links work. It’s all very confusing):

In a news release disseminated on October 29, 2026, there was a typographical error. The reference to “The class A shares are expected to commence trading on an ex-split basis at the opening of trading on November 11, 2026.” should have read “The class A shares are expected to commence trading on an ex-split basis at the opening of trading on November 10, 2026.” No other changes were made. The corrected release follows:
…
Life & Banc Split Corp. (TSX: LBS) (TSX: LBS.PR.A) (the “Fund”) is pleased to announce its intention to complete a stock split of its class A shares (the “Share Split”) due to the Fund’s continuing strong performance. Class A shareholders of record at the close of business on November 11, 2026 will receive 12 additional class A shares for every 100 class A shares held, pursuant to the Share Split, on November 12, 2026. The Share Split is subject to the approval of the Toronto Stock Exchange (the “TSX”).

Class A shareholders will continue to receive regular monthly cash distributions targeted to be $0.10 per class A share following the Share Split. As a result, the total dollar amount of distributions to be paid to class A shareholders is expected to increase by approximately 12%. The Fund provides a distribution reinvestment plan, on a commission-free basis for class A shareholders that wish to reinvest distributions and realize the benefits of compound growth.

Over the last 10 years, the class A shares have delivered a 24.8% per annum total return based on net asset value, significantly outperforming both the S&P/TSX Capped Financials Total Return Index by 9.4% per annum and the S&P/TSX Composite Total Return Index by 12.4% per annum.(1) Since inception, class A shareholders have received cash distributions of $22.15 per share.

Based on the most recently calculated net asset value per unit of the Fund on October 22, 2026, as adjusted for the Share Split, the preferred shares of the Fund are expected to have downside protection from a decline in the value of the Fund’s portfolio of approximately 56%.

The class A shares are expected to commence trading on an ex-split basis at the opening of trading on November 10, 2026. No fractional class A shares will be issued and the number of class A shares each holder shall receive will be rounded down to the nearest whole number. The Share Split is a non-taxable event.

The Fund invests on an approximately equally weighted basis in a portfolio consisting of common shares of the six largest Canadian banks and the four major publicly traded Canadian life insurance companies:

Bank of Montreal	Great-West Lifeco Inc.
National Bank of Canada	The Bank of Nova Scotia
Canadian Imperial Bank of Commerce	Royal Bank of Canada
iA Financial Corporation Inc.	The Toronto-Dominion Bank
Sun Life Financial Inc.	Manulife Financial Corporation

Thanks to Assiduous Reader Newbiepref for bringing this to my attention!

So, equities had a day and a half!

Stocks had their worst day in nearly two years as investors’ concerns about weaknesses in the A.I. industry re-emerged after Democratic midterm victories raised the prospect of tighter regulation.

The S&P 500 fell 4.4 percent on Thursday, marking the most severe drop for the index since April 2025, when President Trump unveiled sweeping global tariffs.

The tech-heavy Nasdaq Composite dropped 5.5 percent, putting the index into correction, defined as a drop of 10 percent or more from its recent peak. The Philadelphia Semiconductor Index, a benchmark for the industry, tumbled over 12 percent. That index has fallen over 30 percent since the beginning of October and is almost 40 percent below its peak in June.
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And as stocks tumbled, the 10-year Treasury note, seen as a haven during periods of market stress, rallied, meaning its yield fell, dropping to 4.83 percent, its lowest since September.
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Qualcomm, a large chipmaker, sank 9.5 percent on Thursday after the company dialed down its earnings forecast; it said high demand for chips was raising its own costs faster than it has been able to raise prices. The sharp stock move reflected broader concerns that supply bottlenecks created by the rush to build A.I. infrastructure could slow the industry’s growth, which means slowing the time it takes for investors to realize profits on their A.I. bets.
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Shares of Elon Musk’s Tesla and SpaceX fell sharply for a second day.

I was pleased to see that Trump Media & Technology Group Corp, DJT, set a new 52-week low today of 3.80, closing at 4.02. I regard this issue as a corruption index – the only reason to buy it is to curry favour.

Five year Canadas ended the day at 3.37%, down about 5bp.

I’ve gotta say, the mid-terms did not disappoint!

PerpetualDiscounts now yield 5.80%, equivalent to 7.54% interest at the standard conversion factor of 1.3x. Long corporates yielded 5.18% on 2026-10-21. Therefore the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has widened to 235bp from the 225bp reported October 28

Well, let’s see how the US Midterms turn out …