PrefBlog

The TXPR Price Index set a new 52-week high today of 710.92, beyond the previous mark of 710.65 set yesterday.

Inflation in the US picked up:

High gas prices pushed up inflation again last month while adding to Americans’ financial strain: Households are saving at the lowest rate in nearly four years, a new report showed Thursday.

The Iran war’s oil price shock lifted the Federal Reserve’s preferred inflation gauge to 3.8% in April from 3.5% the month before, according to Commerce Department data.

The Personal Consumption Expenditures price index rose 0.4% on a monthly basis, slowing from a 0.7% increase in March.

Consumer spending, which powers about two-thirds of the economy, rose 0.5% in April – a seemingly resilient but slower pace than the 1% jump in March.
…
Consumers’ incomes were flat for the month; disposable (after-tax) income fell by 0.1%; and inflation-adjusted disposable income dropped by 0.5%.

Americans continued to tap their piggy banks: Their personal saving rate (saving as a percentage of after-tax income) dropped to 2.6% in April, marking the lowest rate since June 2022, when inflation hit a four-decade high. At the start of the year, the savings rate was 4.3%.
…
The core PCE price index rose at a slower-than-expected rate of 0.2% for the month, but the annual rate moved higher to 3.3%.

The Boston Fed published a working paper by Justin Katz and Paul S. Willen titled The Effect of Land Supply for New Homes on Residential Investment and House Prices:

In recent years, the United States has experienced house price growth outpacing income growth, low supply of new housing units, and flat to negative growth in construction productivity. A large body of research argues that land-use regulations play a central role in explaining these patterns by constraining housing supply. This paper explores a hypothesis that complements the regulatory explanation: In many high-cost markets, large plots of buildable land are scarce, constraining the amount and efficiency of residential construction. Despite its importance for evaluating housing policy, little comprehensive research has studied this alternative explanation. This is partly because there is limited detailed historical parcel-level data on land available for residential development. The paper addresses this data challenge by using a parcel-level data set to measure the buildable-land distribution in New England and track its development from 2007 to 2021.

That suggests an overall strategy for the big corporations gobbling up residential properties for rental purposes … try to shade your purchases so you can combine them to make larger parcels. Could be valuable!

Quadravest has announced:

Canadian Banc Corp. (the “Company”) is pleased to announce
it will undertake an offering of Preferred Shares (TSX: BK.PR.A) of the Company. The offering will be led by National Bank Financial Inc.

The sales period of this overnight offering will end at 8:30 a.m. EST on May 28, 2026. The offering is expected to close on or about June 4, 2026 and is subject to certain closing conditions including approval by the TSX.

The Preferred Shares will be offered at a price of $10.33 per Preferred Share. The closing price on the TSX of the Preferred Shares on May 26, 2026 was $10.38.

Since the inception of the Company, 250 consecutive dividends have been declared for the Preferred Shares. The aggregate dividends declared on the Preferred Shares total $11.78 per share. All distributions to date have been made in tax advantaged eligible Canadian dividends.

Effective October 9, 2025, the DBRS rating on the Preferred Shares is Pfd-3 (low).

The net proceeds of the offering will be used by the Company to invest in a portfolio consisting primarily of six publicly traded Canadian Banks as follows:

Bank of Montreal	Canadian Imperial Bank of Commerce	Royal Bank of Canada
The Bank of Nova Scotia	National Bank of Canada	The Toronto-Dominion Bank

The Company’s Preferred Share investment objectives are to:
i. provide holders with cumulative preferential floating rate monthly cash dividends at a rate per annum equal to the prevailing Canadian prime rate plus 1.50% (minimum annual rate of 5.0% and maximum annual rate of 8.0%) based on original $10 issue price; and
ii. on or about the termination date, currently December 1, 2028 (subject to further 5 year extensions and it has been extended in the past) to pay holders the original $10 issue price of those shares.

This follows their May 12 announcement of a 110-new-for-100-old split of the Capital Units:

Canadian Banc Corp. (the “Company”) is pleased to announce its intention to complete a share split of its Class A shares (the “Share Split”) due to the Company’s strong performance. The Class A shareholders of record at the close of business on May 19, 2026 will receive 10 additional Class A shares for every 100 Class A shares held, pursuant to the Share Split. The Share Split is subject to approval by the Toronto Stock Exchange (the “TSX”).

Class A shareholders will continue to receive monthly cash distributions targeted to be at the rate of 15% annualized based on the volume weighted average market price of the Class A shares for the last 3 trading days of the preceding month following the Share Split. Since inception, Class A shareholders have received cash distributions of $25.65 per share.

The Class A shares are expected to commence trading on an ex-split basis at the opening of trading on May 19, 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 nontaxable event.

The impact of the Share Split will be reflected in the net asset value per unit as at May 29, 2026.

The Company invests in a portfolio primarily consisting of six publicly traded Canadian Banks as follows: Bank of Montreal, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, Bank of Nova Scotia, Toronto-Dominion Bank. Shares held within the portfolio are expected to range between 5-20% in weight but may vary at any time. To generate additional returns above the dividend income earned on the portfolio, the Company engages in a selective covered call writing program.

This news release constitutes a “designated news release” for the purposes of the Company’s prospectus supplement dated June 19, 2025, to its short form base shelf prospectus dated June 18, 2025.

The TXPR Price Index hit a new 52-week high today of 710.65, eclipsing the old mark of 709.86 set May 25.

PerpetualDiscounts now yield 5.69%, equivalent to 7.40% interest at the standard conversion factor of 1.3x. Long corporates yielded 4.93% on 2026-05-27. Therefore the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has widened dramatically to 245bp from the 220bp reported May 20.

The BoC has released a Staff Analytical Paper by Felipe Alves, William Beaudoin, Hélène Desgagnés, Wei Dong, Jan David Schneider, Eugene Trostin, Argyn Toktamyssov and Hannes Twieling titled Assessing the US and Canadian neutral rates: 2026 update:

This paper presents Bank of Canada staff’s current assessment of the US and Canadian neutral rates of interest. The neutral rate is where the Bank expects the policy rate would settle once output is at its long-run potential level and inflation is at target, after the effects of all cyclical shocks have dissipated (Mendes 2014). The Bank does not target the neutral rate, but this is an important input for its economic projections.

We assess the Canadian nominal neutral rate to be in the range of 2.25% to 3.25%, unchanged from our assessment in 2025. We assess the US nominal neutral rate to be in the range of 2.50% to 3.50%, somewhat higher than the range of 2.25% to 3.25% reported in the 2025 assessment.

• • In Canada, lower long-term population growth offsets higher long-term productivity growth (Chernoff et al. 2026).
• • In the United States, the revision is explained by a stronger outlook for potential
  output growth (de Munnik et al. 2026).

The neutral rate of interest is unobservable and inferred from the evolution of the factors that influence it, such as potential output growth and the balance between global savings and investment. Measuring the neutral rate involves considerable uncertainty. Staff’s assessed ranges reflect the uncertainty inherent in the inputs used in the model, but they do not capture the full extent of uncertainties surrounding the neutral rate in the United States and Canada.

Another day, more confusion:

Oil prices fell 6% on Wednesday after U.S. President Donald Trump said that negotiations with Iran were in the final stages, though investors remain wary about the outcome of ⁠peace talks ​as disruption to Middle Eastern supply continues. Brent crude futures fell $6.64, or 5.97%, to $104.64 a barrel by 1:45 p.m. EDT (1745 GMT) and U.S. West Texas Intermediate futures were down $6.49, or 6.23%, at $97.66.

Trump said that negotiations with Iran were in the final stages but warned of further attacks unless Iran agrees ​to a deal. Iranian foreign ministry spokesperson Esmaeil Baghaei said Iran was ready ‌to develop protocols for safe shipping traffic in cooperation with other coastal states, without providing further details.

Despite signs of progress, some market participants and analysts remain wary about the outcome of negotiations and global supply tightness that will likely persist even if the U.S. and Iran reach a deal.

“You’ve got to take all these pronouncements with a ‌grain of salt ​these days, but the market ‌was also quick to reward it and price in the hope of a resolution,” said John Kilduff, ​partner at Again Capital.

A grain of salt? I need a whole block.

None the less, the end of the world that was scheduled by the bond market yesterday has been cancelled:

Yields on U.S. Treasuries on Wednesday retraced their previous day’s gains, after President Donald Trump said deal talks with Iran were in their final stage.

The yield on the benchmark 10-year ⁠Treasury ​note was last down roughly 10 basis points on the day at 4.567%. It reached its highest level since January 2025 on Tuesday, surging to 4.687%.

The 30-year Treasury bond’s yield, which is seen as a barometer of geopolitical and fiscal risk, was last down roughly 7 bps at 5.113%. It briefly touched 5.197% ​on Tuesday, its highest since July 2007 before the global financial ‌crisis.

But a relatively strong 20-year Japanese bond auction prompted yields to retrace their gains. Yields solidified their retreat later on Wednesday following President Donald Trump’s comments that deal talks with Iran were in their final stages.
…
Investors are now pricing in a 41.4% chance the Fed ⁠could raise rates in December, and an 89.6% chance it maintains current rates at its next meeting in June, according to the CME FedWatch tool.

PerpetualDiscounts now yield 5.67%, equivalent to 7.37% interest at the standard conversion factor of 1.3x. Long corporates yielded 5.16% on 2026-05-20. Therefore the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has narrowed to 220bp from the 230bp reported May 13.