Category: Market Action

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TXPR closed at 584.11, up 1.25% on the day. Volume was 4.04-million, second-highest of the past 30 days, surpassed only by yesterday.

CPD closed at 11.65, up 1.13% on the day. Volume of 120,051 was above average but nothing special in the context of the past 30 days.

ZPR closed at 9.29, up 1.53% on the day. Volume of 320,323 was well above average but not extraordinary in the context of the past 30 days.

Five-year Canada yields were unchanged at 1.19% today.

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TXPR closed at 576.90, up 1.14% on the day. Volume was 4.29-million, highest of the past 30 days, dwarfing the 3.33-million recorded on each of the next two biggest trading days August 14 and August 15.

CPD closed at 11.52, up 1.14% on the day. Volume of 102,269 was at about the median of the context of the past 30 days.

ZPR closed at 9.15, up 1.10% on the day. Volume of 225,458 well above average but nothing special in the context of the past 30 days.

Five-year Canada yields were up 1bp to 1.19% today.

What a great day! Only two of the three mainstream indicators made new lows!

TXPR closed at 570.42, up 0.02% on the day but not before touching a new 52-week low of 569.32. Volume was 2.80-million, third-highest of the past 30 days, behind only August 14 and August 15.

CPD closed at 11.39, up 0.53% on the day. Volume of 129,692 was above average but nothing special in the context of the past 30 days.

ZPR closed at 9.05, down 0.01% on the day after touching a new 52-week low of 8.98. Volume of 394,302 was second highest of the past 30 days, behind only August 13.

Five-year Canada yields were up 1bp to 1.18% today.

I note with amusement that TXPR has traced out the first part of a pretty good parabola this month:

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Doubtless there are Technical Analysts out there who will deem this very significant.

PerpetualDiscounts now yield 5.64%, equivalent to 7.33% interest at the standard equivalency factor of 1.3x. Long corporates now yield 3.15%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has widened to an eye-popping 420bp, a new post-Credit Crunch record (second only to the 445bp recorded November 26, 2008, a day on which

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

) and a widening from the 410bp reported August 21.

Another day, another three more 52-week lows!

TXPR closed at 570.29, down 0.35% on the day and just barely above its new 52-week low of 570.28. Volume was 2.54-million, high but not extraordinary in the context of the past thirty days.

CPD closed at 11.33, a new 52-week low and down 0.79% on the day. Volume of 110,835 was near the median in the context of the past 30 days.

ZPR closed at 9.06, down 0.66% on the day after touching a new 52-week low of 9.045. Volume of 177,769 was above average but nothing special in the context of the past 30 days.

Five-year Canada yields were down 8bp to 1.17% today.

For those who would really appreciate a bit of good news, I’ll pass along the tidbit that Queue de Cheval, my favourite steakhouse, is coming to Toronto in November.

Well, we got through the G-7 meeting without any major disruptions, so let’s thank Heaven for small mercies!

In the meantime, two of the three mainstream indicators made new 52-week lows today:

TXPR closed at 572.79, a new 52-week low and down 0.12% on the day. Volume was 2.04-million, about the median for the past thirty days.

CPD closed at 11.42, down 0.52% on the day after touching a new 52-week low of 11.40. Volume of 114,368 was near the median in the context of the past 30 days.

ZPR closed at 9.12, up 0.22% on the day. Volume of 176,652 was above average but nothing special in the context of the past 30 days.

Five-year Canada yields were up 4bp to 1.25% today.

The Stable Genius ratcheted up the trade war today:

Hours after Beijing said it would increase tariffs on American goods in response to President Trump’s latest round of Chinese levies, the president ordered companies in the United States to stop doing business with China and warned of additional retaliation.

In a series of angry Twitter posts, Mr. Trump said “Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing our companies HOME and making your products in the USA.”

The president also said he was ordering the United States Postal Service and private American companies like FedEx, Amazon and UPS to search packages from China for the opioid Fentanyl and refuse delivery.

Powell came perilously close to criticizing policy:

As the year has progressed, we have been monitoring three factors that are weighing on this favorable outlook: slowing global growth, trade policy uncertainty, and muted inflation. The global growth outlook has been deteriorating since the middle of last year. Trade policy uncertainty seems to be playing a role in the global slowdown and in weak manufacturing and capital spending in the United States. Inflation fell below our objective at the start of the year. It appears to be moving back up closer to our symmetric 2 percent objective, but there are concerns about a more prolonged shortfall.
…
Turning to the current context, we are carefully watching developments as we assess their implications for the U.S. outlook and the path of monetary policy. The three weeks since our July FOMC meeting have been eventful, beginning with the announcement of new tariffs on imports from China. We have seen further evidence of a global slowdown, notably in Germany and China. Geopolitical events have been much in the news, including the growing possibility of a hard Brexit, rising tensions in Hong Kong, and the dissolution of the Italian government. Financial markets have reacted strongly to this complex, turbulent picture. Equity markets have been volatile. Long-term bond rates around the world have moved down sharply to near post-crisis lows. Meanwhile, the U.S. economy has continued to perform well overall, driven by consumer spending. Job creation has slowed from last year’s pace but is still above overall labor force growth. Inflation seems to be moving up closer to 2 percent. Based on our assessment of the implications of these developments, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective.

So Stable Genius had to bolster his excuses for the next recession:

Jerome H. Powell, the Federal Reserve chair, kept future interest rate cuts squarely on the table on Friday but suggested that the central bank was limited in its ability to counteract President Trump’s trade policies, which are stoking uncertainty and posing risks to the economic outlook.

Mr. Powell’s remarks drew a swift and angry reaction from Mr. Trump, who equated the Fed leader with the president’s adversary in the trade war, President Xi Jinping of China.

“My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?,” Mr. Trump wrote in one of a series of Twitter posts.

The markets noticed:

The Dow Jones Industrial Average fell 622.19 points, or 2.37 per cent, to 25,630.05, the S&P 500 lost 75.7 points, or 2.59 per cent, to 2,847.25 and the Nasdaq Composite dropped 239.62 points, or 3 per cent, to 7,751.77.

In Toronto, the S&P/TSX Composite index was unofficially down 215.88 points, or 1.33 per cent, at 16,037.58.
…
The two-year/10-year yield curve inverted last week for the first time since 2007, a signal that a U.S. recession is likely in one to two years. The curve has traded in and out of inversion over the past three days.

U.S. Treasury yields fell, with 10-year notes last up 25/32 in price to yield 1.5266 per cent, from 1.61 per cent late on Thursday.

The two-year/10-year yield curve tripped to negative territory early in the session and for a third consecutive day.

The U.S. dollar fell after Powell’s comments and dropped further after Trump’s tweets.

… and, just as I go to press, I learn that Stable Genius has freaked out again:

Twelve hours after China said it would retaliate against Mr. Trump’s next round of tariffs by raising taxes on American goods, Mr. Trump said he would boost existing tariffs on $250 billion worth of Chinese goods to 30 percent from 25 percent on Oct. 1.

And he said the United States would tax another $300 billion worth of Chinese imports at a 15 percent rate, rather than the 10 percent he had initially planned. Those levies go into effect on Sept. 1.

“China should not have put new Tariffs on 75 BILLION DOLLARS of United States product (politically motivated!),” Mr. Trump tweeted. “Starting on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30%.”

I’m sure we’re all shocked that the Chinese would do something “politically motivated”.

And the preferred share market was back to normal, with all three mainstream indicators setting new lows:

TXPR closed at 573.00, down 0.48% on the day after touching a new 52-week low of 572.88. Volume was 2.71-million, third-highest of the past 30 days, behind only August 14 and August 15.

CPD closed at 11.48, down 0.35% on the day after touching a new 52-week low of 11.44. Volume of 61,338 was low in the context of the past 30 days.

ZPR closed at 9.10, down 0.55% on the day after touching a new 52-week low of 9.08. Volume of 159,026 was a little above average but nothing special in the context of the past 30 days.

Five-year Canada yields were down 12bp to 1.21% today – but even that big drop leaves us 1bp higher than last Friday’s yield.

What a great day! Only one of the mainstream indicators made a new 52-week low!

TXPR closed at 575.74, up 0.11% on the day. Volume was 2.18-million, nothing special in the context of the past 30 days.

CPD closed at 11.52, up 0.17% on the day. Volume of 97,108 was above median but nothing special in the context of the past 30 days.

ZPR closed at 9.15, unchanged on the day after touching a new 52-week low of 9.145. Volume of 111,979 was a little above average but nothing special in the context of the past 30 days.

Five-year Canada yields were up 5bp to 1.33% today.

There was good news for Poloz in today’s inflation numbers:

The Canadian dollar strengthened against its U.S. counterpart on Wednesday, recovering from a two-month low it hit the previous day after stronger-than-expected domestic inflation data, but earlier gains were capped as the greenback rallied broadly.

The U.S. dollar gained against a basket of currencies after minutes from the Federal Reserve’s July meeting showed that policy-makers were united in wanting to avoid the appearance of being on the path to further rate cuts.

Canada’s annual inflation rate held steady in July at 2 per cent as lower costs for services were offset by higher prices for durable goods. Analysts had expected the annual rate to fall to 1.7 per cent from 2 per cent in June.
…
Canada’s retail sales data is due on Friday, with a Reuters poll forecasting a 0.1 per cent decrease, which could help guide expectations about the Bank of Canada’s interest rate decision.

Canadian government bond prices were lower across the yield curve, with the two-year down 10 cents to yield 1.395 per cent and the 10-year falling 53 cents to yield 1.213 per cent.

Each of the mainstream indicators made a new 52-week low today. This is getting monotonous.

TXPR closed at 575.08, down 0.41% on the day after touching a new 52-week low of 574.94. Volume was 2.44-million, above average but nothing special in the context of the past 30 days.

CPD closed at 11.50, a new 52-week low and down 0.26% on the day. Volume of 73,613 was above median and nothing special in the context of the past 30 days.

ZPR closed at 9.15, a new 52-week low and down 0.11% on the day. Volume of 163,912 was a little above average but nothing special in the context of the past 30 days.

Five-year Canada yields were up 8bp to 1.28% today.

PerpetualDiscounts now yield 5.58%, equivalent to 7.25% interest at the standard equivalency factor of 1.3x. Long corporates now yield 3.15%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has widened to an eye-popping 410bp, a new post-Credit Crunch record (second only to the 445bp recorded November 26, 2008, a day on which

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

) and a slight (and possibly spurious) widening from the 405bp the reported August 14.

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Each of the mainstream indicators made a new 52-week low today.

TXPR closed at 577.43, a new 52-week low and down 0.56% on the day. Volume was 2.40-million, above average but nothing special in the context of the past 30 days.

CPD closed at 11.53, a new 52-week low and down 0.69% on the day. Volume of 138,446 was above average but nothing special in the constext of the past 30 days.

ZPR closed at 9.16, a new 52-week low and down 0.97% on the day. Volume of 249,098 was high but oddly the “Price History” tab on tmxmoney refuses to display data for this issue. Yahoo Finance comes through with the information that today had the third-highest volume of the past thirty days, behind August 13 and August 14.

Five-year Canada yields were down 2bp to 1.20% today.

Mohamed A. El-Erian has again updated my favourite financial market chart:

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He also passed on another great chart:

Along with the chart showing that the stock of negative-yielding bonds now stands at some $17 trillion, this one, via Zerohedge on Austria’s 100-year bond, screams how unusual — very very very unusual — conditions are in global fixed income.

Issued two years ago with a yield of 2.1%, its price has doubled … implying that, if held to maturity, buyers today would recoup half of their investment.

Look tonight for a Bloomberg Opinion post on a related issue.

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Husky, which has been a feature on the price-movement highlights charts recently, saw a modest counter-move today:

Shares in Husky Energy Inc. are up by about five per cent after an RBC Dominion Securities analyst suggested its low share price makes this a good time for the company to be taken private.

The stock jumped by as much as 47 cents to $9.24 on Monday morning, still well off its 52-week high of $22.98 set last Sept. 27.

In a report over the weekend, analyst Greg Pardy suggests that Husky’s near-15-year-low share prices make privatization attractive for the entities controlled by Hong Kong billionaire Li Ka-Shing which own 69.5 per cent of the equity.

There was more good news, of sorts, today: neither CPD nor ZPR made a new low!

TXPR closed at 580.66, down 0.07% on the day after setting a new 52-week low of 580.61. Volume was 1.54-million, the lowest since August 2 and nothing special in the context of the past 30 days.

CPD closed at 11.61, up 0.09% on the day. Volume of 84,120 was at about the median of the past 30 days.

ZPR closed at 9.25, up 0.22% on the day. Volume of 66,962 was very low in the context of the past thirty days.

Five-year Canada yields were up 2bp to 1.22% today.

So what’s going on with Structured Notes? BMO’s page shows JHN12544, to be issued August 21 with a seven year term; and JHN12545, to be issued August 21 with a seven year term. TD’s page shows Series 416 to be issued August 26 with a seven year term. National’s page shows nothing cooking after one was issued August 2 and four issued in July.