Category: Market Action

The TXPR price index set a new 52-week high today of 700.90, eclipsing the old mark of 700.70 set yesterday.

PerpetualDiscounts now yield 5.71%, equivalent to 7.42% interest at the standard conversion factor of 1.3x. Long corporates yielded 4.99% on 2026-4-22. Therefore the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has narrowed to 245bp from the 255bp reported April 15.

David Berman wrote a piece in the Globe today extolling preferred shares:

When you start constructing a portfolio that will generate cash in your retirement – or hey, you just like the idea of steady income today – preferred shares may be worth a look.

They beckon with yields north of 5 per cent, which is significantly better than current yields on government bonds and guaranteed investment certificates (GICs).

And when held in a taxable account, the distributions from preferred shares receive favourable treatment from the government.

Kevin Warsh had his confirmation hearing for the Fed chair today:

Kevin Warsh faced searching questions at his Senate confirmation hearing Tuesday. Democrats and even at times Republicans challenged his complicated finances, his relationship to President Donald Trump and what often seems like a wide-eyed endorsement of the promise of artificial intelligence. But one core issue for Warsh went all but unquestioned: his plan for what he calls “regime change” at the Federal Reserve.
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Warsh would break that status quo. He declined at the hearing to commit to continuing with regular press conferences, which the Fed has held since the financial crisis. He would abandon forward guidance, the Fed’s way of signaling to the markets where it wants interest rates to go. He would even move away from the Fed’s preferred measure of inflation, the core personal consumption expenditure measure, which he dismissed as a “rough swag as to what was going on” with prices. “We don’t have to do a rough swag any more.”

These ideas aren’t just window dressing for Warsh. They are how he brings down the long-term interest rates that trouble Americans in the form of higher mortgage and credit-card rates. Warsh believes markets have driven those rates up in response to muddled policy from the Fed, including the recent spike in inflation after Covid — but going much further back, too. The Fed, he argues, has lost credibility.

Well, he’s entitled to his opinions. But when I think of my mental list of American institutions that have lost credibility over the past fifteen months … the Fed ain’t there.

TXPR closed at 700.50, setting a new 52-week high, up 0.81% on the day. Volume today was 2.60-million, highest by far of the past 21 trading days.

CPD closed at 13.91, up 0.29% on the day. Volume was 49,790 (consolidated volume was 368,530), near the median of the past 21 trading days.

ZPR closed at 12.66, setting a new 52-week high, up 0.32% on the day. Volume was 103,580 (consolidated = 269,320), near the median of the past 21 trading days.

Five-year Canada yields were down to 3.05%.

Other markets did well:

The benchmark S&P 500 and the tech-heavy Nasdaq each rallied to their third record close in a row on Friday, while the blue-chip ⁠Dow marked ​its highest finish since late February, as investors cheered Iran’s decision to open the Strait of Hormuz and were optimistic it could reach an agreement with the United States. The TSX is now less than 200 points away from its own record closing high.

Iranian Foreign Minister Abbas Araqchi said in a post on X that passage for all commercial vessels through the Strait of Hormuz was “completely open” ​for the remainder of the 10-day truce between Israeli forces and ‌Iran-backed Hezbollah agreed to in Lebanon. This followed U.S. President Donald Trump’s announcement that talks could take place this weekend between Tehran and Washington and that they could soon secure a peace agreement to end the Iran war, which has left thousands dead since the U.S. and Israel launched joint strikes on Iran on February 28.

With traders increasingly confident ‌that an end ​to the war is near, U.S. ‌crude oil prices tumbled 11%, alleviating inflation concerns. The Strait of Hormuz is a vital waterway ​for global energy transportation.
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According ⁠to preliminary data, the S&P 500 gained 84.64 points, or 1.20%, ​to end at 7,125.12 points, while the Nasdaq Composite gained 363.57 points, or 1.51%, to 24,466.27. The Dow ⁠Jones Industrial Average rose 864.23 points, or 1.78%, to 49,442.95.

The S&P/TSX Composite Index closed up 0.86%, or 294.06 points, at 34,346.29, just below the record closing high of 34,541.27 on March 2. The drop in oil prices pressured energy shares, leading to TSX underperformance relative to the major U.S. indexes.

Remember the good old days, when you could triple the value of your company just by sticking a “dot-com” in your name? Well, happy days are here again!

Allbirds, the eco-friendly shoe brand that found its way onto the feet of tech CEOs and movie stars before falling on hard times, is pivoting to artificial intelligence.

On Wednesday, the San Francisco-based company said it had signed a definitive agreement with an unnamed institutional investor for US$50-million in financing to shift its business to AI infrastructure. It will also have a new name: NewBird AI. It plans to use the proceeds to purchase graphics processing units, known as GPUs. The transaction is expected to close during the second quarter of this year.

“The rise of AI development and adoption has created unprecedented structural demand for specialized, high-performance compute that the market is struggling to meet,” the company said in the release. “NewBird AI is being built to help close that gap.”
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Shares of Allbirds closed up 582 per cent at US$16.99. A few days ago, the stock was trading at US$3.

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.