Category: Market Action

The posturing about Powell continues:

President Donald Trump said he will fire Federal Reserve Chair Jerome Powell if he does not step aside when his term at the helm of the central bank expires next month.

“Then I’ll have to fire him,” Trump told Fox Business’ Maria Bartiromo Wednesday in response to a question about Powell staying on at the Fed.

The timing of Powell’s departure from the Fed has been complicated by the Department of Justice’s criminal investigation into the Fed chair that accuses Powell of lying to Congress in testimony last year about the Fed’s $2.5 billion-dollar renovation of its Washington, DC, headquarters. It’s a subject the Trump administration has zoned in on as part of its repeated criticism of Powell’s leadership of the Fed.

Trump in January nominated former Fed governor Kevin Warsh to replace Powell, whose term leading the central bank expires on May 15. But North Carolina Republican Sen. Thom Tillis, a key member of the committee that approves Fed nominees, reiterated this week that he will not vote to confirm Warsh until the Powell probe has concluded.

The Trump administration doubled down on its support for the probe this week, despite the likelihood that it will delay Warsh’s nomination and could lead to a legal faceoff with Powell that could prolong Trump’s unwanted Fed chair to stay at the central bank

PerpetualDiscounts now yield 5.79%, equivalent to 7.53% interest at the standard conversion factor of 1.3x. Long corporates yielded 4.98% on 2026-4-15. Therefore the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has narrowed slightly (and perhaps spuriously) to 255bp from the 260bp reported April 8.
Note: This table was previously published reporting after-tax yields-to-worst. It has been replaced with this one, which reports pre-tax YTWs.

US wholesale inflation popped:

Fast-rising oil prices sent US businesses’ costs higher in March, lifting wholesale inflation to 4%, the highest annual rate in three years, according to Bureau of Labor Statistics data released Tuesday.

The Producer Price Index, which measures the average change in prices received by producers of goods and services, rose 0.5% from February, the same pace seen the month before. A 15.7% rise in gasoline prices accounted for nearly half of last month’s increase.
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Still, despite wholesale inflation hitting a three-year high, the March PPI report fared better than economists had expected. They estimated that the war-driven energy shock would cause prices to jump 1.1% from February, driving the annual rate to 4.6%, according to FactSet consensus estimates.

Instead, Tuesday’s report showed that falling food prices and flat services prices helped to blunt some of the blow from the rapidly rising oil prices.

Another likely factor in the tamer-than-expected numbers was the report’s timing: The BLS asked businesses to provide pricing data as of Tuesday of the week containing the 13th. In this case, that would be March 10, which was just two weeks after the US-Israeli strikes in Iran began.

When excluding the volatile categories of food and energy, core PPI rose just 0.1% for the month, holding the annual rate steady at 3.8%.

Canada’s jobs report was a bit of fizzle today, but that’s actually an improvement over recent releases:

Statistics Canada’s labour force survey on Friday showed little improvement in March after a volatile few months that saw employment levels surge and then drop.

The agency said employers collectively added 14,000 jobs in March, roughly in line with economists’ expectations.

The unemployment rate remained unchanged at 6.7 per cent.

CIBC senior economist Andrew Grantham said he was expecting a larger rebound in the March jobs data after January and February cumulatively shed more than 100,000 positions. That has partially offset a rapid run-up in hiring to close out 2025.
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Average hourly wages across the country, meanwhile, rose 4.7 per cent year-over-year – a jump from 3.9 per cent in February and the fastest pace since October, 2024.

StatCan said some of the recent increase in wages is due to the “composition of employment,” meaning the economy isn’t adding or maintaining as many lower-paying jobs that typically pull down the wage growth average.

Controlling for compositional factors leaves average annual wage growth at 3.6 per cent in March, StatCan said, roughly in line with January and February’s figures.

DBRS downgraded BC:

DBRS Limited (Morningstar DBRS) downgraded the Province of British Columbia’s (BC or the Province) Issuer Rating and Long-Term Debt credit rating to AA from AA (high) and confirmed its Short-Term Debt credit rating at R-1 (high). Morningstar DBRS also downgraded British Columbia Hydro and Power Authority’s (BC Hydro) Long-Term Obligations credit rating to AA from AA (high) and confirmed its Short-Term Obligations credit rating at R-1 (high). Concurrently, Morningstar DBRS changed the trends on the Issuer Rating (BC), Long-Term Debt credit rating (BC), and Long-Term Obligations credit rating (BC Hydro) to Stable from Negative. The trends on the short-term credit ratings are Stable.

KEY CREDIT RATING CONSIDERATIONS
The downgrade reflects a deterioration in public finances relative to prior expectations. While the Province had previously indicated a potential path to balance, its 2026-27 budget (Budget 2026) now points to a sustained period of elevated deficits and a larger borrowing program, which has resulted in weaker key financial metrics. Morningstar DBRS notes that the Province has introduced modest tax measures alongside expenditure management targets and selective capital project delays, which signal some willingness to respond to fiscal pressures. While these have been insufficient to materially improve the fiscal outlook, they support a gradual approach to fiscal stabilization. The restoration of the Stable trends reflects the Province’s solid economic fundamentals and Morningstar DBRS’ expectation that the Province will be able to reduce the deficit gradually and slow down debt growth over the medium term. The credit ratings continue to be supported by BC’s prudent budgeting practices, conservative debt and liquidity management, strong market access, prudent debt structure, and diversified economic base, all of which continue to provide resilience to the Province’s credit profile.

Budget 2026 forecasts a deficit of $13.3 billion in 2026-27, compared with the $9.6 billion deficit now anticipated in 2025-26. Over the medium term, the Province projects deficits of $12.2 billion and $11.4 billion for 2027-28 and 2028-29, respectively. These equate to operating deficit-to-operating revenues ratios of 13.7% for 2027-28 and 12.5% for 2028-29. Although Budget 2026 projects gradually declining deficits beyond 2026-27, they remain elevated through 2028-29, with no plan to return to balance.

The latest budget points to a deterioration in the debt trajectory beyond Morningstar DBRS’ previous expectations. The Province projects the adjusted debt-to-operating revenues ratio to increase to 162.5% in 2026-27 and will continue to rise to 197.8% by 2028-29. Given there is no plan to return to balance, Morningstar DBRS expects debt to remain high over the medium term.

US inflation continues to run high:

Thursday’s report also showed that inflation remained stubbornly higher than typical: The Personal Consumption Expenditures price index – the inflation gauge the Federal Reserve uses for its 2% target rate – climbed 0.4% from January, which held the annual rate at 2.8%.
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Excluding food and energy prices, which tend to be quite volatile, the core PCE price index also rose 0.4%, bringing the annual rate to 3% from 2.9% the month before.
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Consumers appeared to dip into the piggy banks to help prop up their spending: The savings rate fell to 4% from 4.5% the month before as inflation-adjusted (or real) after-tax incomes dropped 0.5% for the month.
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Gross domestic product, the broadest measure of economic output, grew at an annualized rate of 0.5% in the October-through-December period, down from the second estimate’s 0.7% and much lower than the 1.4% initially reported. The latest estimate factored in new data showing weaker business investment in the fourth quarter, a period when the US government was shut down for a record 43 days.

PerpetualDiscounts now yield 5.83%, equivalent to 7.58% interest at the standard conversion factor of 1.3x. Long corporates yielded 5.00% on 2026-4-8. Therefore the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has widened to 260bp from the 250bp reported April 1.

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

March Survey: Short-Term Inflation Expectations Rise as Gas Price Growth Expectations Surge; Labor Expectations Come in Mixed

• Median inflation expectations increased by 0.4 percentage point (ppt) to 3.4 percent at the one-year-ahead horizon, increased by 0.1 ppt to 3.1 percent at the three-year-ahead horizon, and were unchanged at 3.0 percent at the five-year-ahead horizon in March.
• Median year-ahead commodity price change expectations increased by 5.3 ppts for gas to 9.4 percent, the highest reading since March 2022.
• The mean perceived probability of finding a job if one’s current job was lost increased by 1.9 ppts to 45.9 percent; however, the mean perceived probability of losing one’s job in the next twelve months also increased by 0.6 ppt to 14.4 percent.
• Perceptions about households’ current financial situations deteriorated compared to a year ago, with a larger share of households reporting a worse financial situation and a smaller share reporting a better financial situation. Year-ahead expectations about households’ financial situations also worsened, with the share of households expecting a worse financial situation at its highest level since April 2025.

For more details:
Press Release: Short-Term Inflation Expectations Increase as Gas Price Growth Expectations Spike

Turnover picked up a little to 8% in March; there was some movement from FixedReset (Premium) issues into FixedReset (Discounts).

Sectoral distribution of the MAPF portfolio on March 31, 2026, was:

The “total” reflects the un-leveraged total portfolio (i.e., cash is included in the portfolio calculations and is deemed to have a duration and yield of 0.00.). MAPF will often have relatively large cash balances, both credit and debit, to facilitate trading. Figures presented in the table have been rounded to the indicated precision.

Credit distribution is:

Liquidity Distribution is:

The distribution of Issue Reset Spreads is:

Distribution of Floating Rate Start Dates is shown in the table below. This is the date of the next adjustment to the dividend rate, if the issue is currently paying a fixed rate for a limited time; which in practice is successive terms of 5 years. Issues that adjust quarterly are considered “Currently Floating”.

MAPF is, of course, Malachite Aggressive Preferred Fund, a “unit trust” managed by Hymas Investment Management Inc. Further information and links to performance, audited financials and subscription information are available the fund’s web page. The fund may be purchased directly from Hymas Investment Management. A “unit trust” is like a regular mutual fund, but are not sold with a prospectus This is cheaper, but means subscription is restricted to “accredited investors” (as defined by the Ontario Securities Commission). Fund past performances are not a guarantee of future performance. You can lose money investing in MAPF or any other fund.