Category: Market Action

TXPR closed at 676.09, down 0.72% on the day. Volume today was 1.96-million, second-highest of the past 21 trading days.

CPD closed at 13.40, down 0.67% on the day. Volume was 49,200, well above the median of the past 21 trading days.

ZPR closed at 11.855, down 0.80% on the day. Volume was 146,500, third-highest of the past 21 trading days.

Five-year Canada yields were down 3bp to 2.80%.

The rather late September US jobs number is getting mixed reviews:

The economy added 119,000 jobs in September, more than double what forecasters had expected and well above the 71,000-job average for the rest of 2025. Numbers for the previous two months were revised down slightly, erasing 33,000 job gains from July and August, which made September look more like an acceleration.

However, the strength was not widely distributed.

As has been the case for the past two years, job growth was largely supplied by the health care industry, which added 43,000 jobs. Bars and restaurants added 37,000, an indication of robust spending on hospitality services.

Both of those sectors are tied to an economy that is aging and lately powered by higher-income consumers, who have been spending freely on discretionary services while those on the lower end of the income spectrum struggle to keep up with their bills.

The equities market responded with uncertainty:

Bullish investors lost their nerve on Thursday and a brief rally in stocks went into reverse as concerns about overvalued A.I. companies crept back into the market.

The midday fade came after strong gains in early morning trading in what investors and analysts initially attributed to relief after solid earnings reports from Nvidia, the flag-bearer of the move toward artificial intelligence that has propelled technology stock prices higher, and Walmart, a bellwether of consumer health.

But investors’ early enthusiasm quickly gave way to afternoon selling pressure.

The S&P 500 tumbled after climbing as much as 1.9 percent in morning trading. The benchmark ended the day 1.6 percent lower, a reversal of more than 3 percent from its highest point.

Sorry this is late!

TXPR closed at 681.02, down 0.59% on the day. Volume today was 1.37-million, third-highest of the past 21 trading days.

CPD closed at 13.49, down 1.46% on the day. Volume was 34,101, below the median of the past 21 trading days.

ZPR closed at 11.95, down 0.83% on the day. Volume was 86,360, below the median of the past 21 trading days.

Five-year Canada yields were up to 2.83%.

Funny day:

Stocks ended mixed on Friday as investors looked ahead to Nvidia’s quarterly results next week and worried that the Federal Reserve may hold off on cutting U.S. interest rates in December.

The market partly recovered after a selloff early in the session that dragged all three major Wall Street indexes as well as Canada’s main index down more than 1%.

Investors in recent days have fretted about the pace of rate cuts and pricey valuations of heavyweight artificial intelligence stocks that have fueled much of the U.S. stock market’s gains in recent years.

Nvidia, Palantir and Microsoft each gained more than 1%.

Expectations the Fed will cut rates at its December policy meeting have faded in recent days amid signs of persistent inflation, caused in part by U.S. President Donald Trump’s global tariffs. The probability of a 25-basis-point rate cut in December has fallen to under 50% from 67% last week, according to CME Group’s FedWatch tool.

Kansas City Fed President Jeffrey Schmid said on Friday his concerns about “too hot” inflation go well beyond the narrow effects of tariffs, signaling that he could dissent again at the Fed’s December meeting should policymakers opt to cut short-term borrowing costs. He was one of two dissenters in the Fed’s October decision to lower the policy rate by a quarter of a percentage point.
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The S&P 500 fell 0.05% to end at 6,734.11 points.

The Nasdaq gained 0.13% to 22,900.59 points, while the Dow Jones Industrial Average declined 0.65% to 47,147.48 points.

The S&P/TSX composite index ended up 72.82 points, or 0.2%, at 30,326.46. For the week, the index was up 1.4%. It touched on Wednesday a record closing high at 30,827.58.

The TXPR Price Index was down 0.44% on the day.

Carnage and despair was the order of the day:

Wall Street ended sharply lower on Thursday, with steep losses in Nvidia and other AI heavyweights, as investors scaled back expectations of interest rate cuts due to inflation worries and divisions among central bankers about the U.S. economy’s health. The selloff extended to Canada, where the main index posted its biggest decline in seven months, with tech stocks leading the fall.

All three major U.S. stock indexes posted their steepest daily percentage declines in over a month. The U.S. government reopened after a record 43-day shutdown that had worried investors and disrupted the flow of economic data.

A growing number of Federal Reserve policymakers in recent days have signaled hesitation about further interest rate cuts, pushing financial market-based odds of a reduction in borrowing costs in December to near even. Fed officials who spoke recently cited worries about inflation and signs of relative stability in the labour market after two U.S. interest rate cuts this year.
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Traders are pricing in about a 47% chance of a 25-basis-point rate cut in December, lower than last week’s 70% probability, according to CME Group’s FedWatch tool.

Shares fell for some of the U.S. stock market’s strongest performers in recent years, as investors fretted about high valuations fueled by optimism about artificial intelligence.

Nvidia, the world’s most valuable company, dropped 3.6%, Tesla fell 6.6% and Broadcom declined 4.3%.
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The S&P 500 declined 1.66% to end the session at 6,737.49 points. The Nasdaq fell 2.29% to 22,870.36 points, while the Dow Jones Industrial Average declined 1.65% to 47,457.22 points.

The S&P/TSX composite index ended down 573.94 points, or 1.9%, at 30,253.64, after posting a record high closing level on Wednesday.

Canadian preferreds got off lightly, with the TXPR Price Index down 22bp.

PerpetualDiscounts now yield 5.49%, equivalent to 7.14% interest at the standard conversion factor of 1.3x. Long corporates yielded 4.72% on 2025-11-12, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has remained at the 240bp reported October 29.

The TXPR Price Index set a new 52-week high today of 693.91, beating the old mark of 693.26 set October 31.

The Globe had a nice piece about Canadian corporates:

Low interest rates are attracting companies that previously relied on other funding options, such as bank loans. Combined with new issuers at home and the flood of foreign companies tapping the domestic corporate debt market from abroad, businesses generally just need more capital to build costly data centres and restructure supply chains in response to protectionist risks.

And despite all the new supply, investors are gobbling up every deal that emerges.
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The official stats don’t actually tell the whole story. Maple deals, which refer to non-Canadian companies issuing Canadian dollar-denominated bonds in the Canadian market, are not included in LSEG data and are also soaring.

From Jan. 1 through Sept. 25, RBC tracked more than $14-billion worth of maple transactions, putting that subset of the market on track for its second-best year, with only the dealmaking frenzy of 2021 delivering larger maple numbers.

The demand for maple bonds is partly due to a technical change implemented at the start of 2025, when newly issued maple bonds started getting included in the FTSE Canada Universe Bond Index. That change gave maple issuers access to a much larger pool of investors, including the massive contingent of investors that own index-tracking funds.
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Corporate credit spreads, meanwhile, are near record lows. Because they measure the difference in yield between a corporate bond and a risk-free government bond, such narrow spreads imply investors perceive very little risk in lending to Canadian businesses.
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As of Sept. 25, roughly $9.6-billion worth of Canadian corporate hybrid bonds have been issued since the start of 2025, RBC data shows. In 2024, nearly a record-setting year for Canadian corporate bond issuance overall, total hybrid issuance was just $1.1-billion.

That 2025 figure might appear low relative to the more than $50-billion in debt corporate Canada issues in any given year. But for perspective, consider that Canadian companies issued a total of $8.9-billion in hybrid debt over the five most recent calendar years, from 2020 through 2024, or $700-million less than what has been issued so far in 2025 alone. And the year is not over.

What goes up must come down … the size of the issuance and particularly strength of the hybrid and Maple issuance, may be considered an indicator – but only one indicator! – that the bond market’s a bit on the toppy side.

The Boston Fed has released a working paper by Stefano Corradin, José L. Fillat, and Carles Vergara-Alert titled Misestimating House Values: Consequences for Household Finance:

Key Findings
About 5 percent of homeowners undervalue their house by at least $87,500, and 5 percent overvalue their house by at least $53,000.
A $59,800 increase in house overvaluation, which represents one standard deviation, results, on average, in a 1.1 to 1.9 percent decrease in a household’s risky stockholdings.
The same increase in house overvaluation results in a 1.3 to 2.5 percent increase over liquid wealth in the share of a household’s assets that are risk free, holding house value and mortgage debt constant.
In addition, the increase in overvaluation leads to a 1.5 to 4.3 percent (or 2.63 to 4.31 percentage point) increase in a household’s consumption relative to its liquid wealth.

Implications
The findings underscore the role of housing-value misestimation in the marginal propensity to consume, suggesting that households adjust their spending behavior in response to perceived, in addition to actual, wealth gains. Additionally, the findings show that households with higher perceived house values tend to reallocate financial assets away from stocks toward risk-free assets, reinforcing a conservative shift in their financial portfolio composition. These results suggest that financial advisors and policymakers should account for biases in housing wealth perceptions when designing investment and retirement strategies. In addition, given the widespread use of home equity as collateral, the findings imply that misestimation of house values could have significant implications for credit availability and macroeconomic stability.

A New York Fed staff report by Alain Chaboud, Ellen Correia Golay, Michael Fleming, Yesol Huh, Frank Keane and Or Shachar titled Liquidity and Trading Dynamics in the Off-the-Run U.S. Treasury Market didn’t fascinate this old bond guy, but there was an interesting table:

Jobs, jobs, jobs!

The Canadian economy enjoyed a burst of hiring activity for the second consecutive month in October, offsetting summer job losses and bolstering calls that the Bank of Canada is done cutting interest rates for now.

The labour market added 67,000 jobs last month and the unemployment rate fell to 6.9 per cent from 7.1 per cent, Statistics Canada said Friday in a report. Financial analysts were expecting a small loss of 5,000 positions.
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The odds are slim that the Bank of Canada will cut interest rates at its next decision on Dec. 10. Interest rate swaps, which capture market expectations of monetary policy, are pricing in a 5-per-cent chance of a reduction next month, down from 13-per-cent odds on Thursday, according to Bloomberg data.
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There were, however, some weak spots in Friday’s report. The entirety of October’s job gains were in part-time work, and most industries shed positions during the month. Statscan noted that from January to October, employment in goods-producing industries has fallen by 54,000, largely because of losses in construction and manufacturing.

Fitch doesn’t think much of the federal budget:

Combined with sizable non-budgetary financing needs (mainly support of enterprise crown corporations), the higher deficits will substantially increase general government gross debt (GGGD), which we forecast to reach 91.8% of GDP in 2025 from 88.6% in 2024, before accelerating to 98.5% by 2027, nearly double the forecast ‘AA’ median of 49.6%.
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However, despite the government’s Comprehensive Expenditure Review and substantial increase in capital expenditure, the budget only proposes to cut CAD60 billion in spending over five years, the bulk of which comes from civil service reductions of around 10%. Key social programs established under former Prime Minister Justin Trudeau, such as PharmaCare, will be protected.

Provincial operating transfers are left untouched, and the provinces stand to gain from the government’s investment priorities—both directly, through higher capital transfers for key infrastructure projects, and indirectly, through economic activity triggered by expanded investments. However, rising central government debt could weigh on provincial debt metrics Fitch tracks, particularly if near-term economic gains fail to materialize.