Category: Market Action

PerpetualDiscounts now yield 5.71%, equivalent to 7.42% interest at the standard conversion factor of 1.3x. Long corporates yielded 4.86% on 2025-9-17, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) remains at the 255bp reported September 17.

I have updated the post regarding the GWO new issue.

With the new issues from GWO and POW coming out, one has to wonder whether there will be more. But today DBRS rated some sub-debt from Enbridge:

DBRS Limited (Morningstar DBRS) assigned a credit rating of BBB with a Stable trend to Enbridge Inc.’s (Enbridge or the Company) issuance of $1.0 billion, 5.15% Fixed-to-Fixed Rate Subordinated Notes (the Hybrid Notes), due December 17, 2055. Enbridge intends to use the net proceeds from the sale of the Hybrid Notes to repay short-term debt, partially fund capital projects and, if applicable, for other general corporate purposes of the Corporation and its affiliates.

The credit rating assigned to this newly issued debt instrument is based on the credit rating of an already-outstanding debt series of the above-mentioned debt instrument. Please refer to the most recent Morningstar DBRS press release dated June 27, 2025 https://dbrs.morningstar.com/research/457133/ for more information, including all relevant disclosures.

The rating listed above is based on the Final Term Sheet dated September 15, 2025; the Trust Indenture dated October 20, 1997 and information provided by Enbridge to Morningstar DBRS as of September 15, 2025.

Fitch rated it too:

Fitch Ratings has assigned a ‘BBB-‘ rating to Enbridge Inc.’s (ENB) offering of CAD-denominated junior subordinated notes. Proceeds from the offering will be used for existing debt repayment and general corporate purposes. Fitch currently rates ENB’s Long-Term Issuer Default Rating (IDR) ‘BBB+’ with a Stable Rating Outlook.

The ratings reflect the Enbridge family’s large size, diversity, and stability and visibility of expected cash flows. The ‘BBB+’ IDR considers Fitch’s view of the constructive regulation supporting ENB’s various franchises, including natural gas distribution (utility), crude oil transportation and natural gas transmission in Canada and the U.S. Leverage is appropriate for the rating, and Fitch expects it to remain comfortably within the boundaries for the rating over the forecast period.

The Stable Outlook reflects expectations for supportive supply/demand fundamentals underlying the vast majority of ENB’s businesses.

Well, we didn’t need any more Enbridge preferreds anyway! Not that we need more GWO/POW preferreds either, but still!

The FOMC released its statement:

Recent indicators suggest that growth of economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen.

In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4 to 4‑1/4 percent. In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Alberto G. Musalem; Jeffrey R. Schmid; and Christopher J. Waller. Voting against this action was Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/2 percentage point at this meeting.

No surprise in the action; not much surprise that Trump’s … muse? puppet? … dissented dovishly. I’m pleased to see that Waller didn’t join him – Waller is, or was, considered a contender for governor:

Federal Reserve Governor Christopher Waller is emerging as a top candidate to be the central bank’s next chair, Bloomberg News reported on Thursday, citing people familiar with the matter.

Waller has met with members of President Donald Trump’s team, who are impressed with him, though he has not met with the president, Bloomberg News reported. A Fed spokesperson had no comment.

Waller dissented in July as did Bowman, who was recentely elevated to regulatory honcho. As I said at the time, those dissents were justifiable but disquieting; their non-dissents in today’s meeting is a good, though not definitive, sign.

These people are at the top of their profession; I’ve never met them, but can well imagine that their legacy is important to them. Nobody wants to be mentioned in the same breath as Arthur Burns! Except maybe Miran …

The dotPlot is, as always, fascinating:

Matt Egan had a great comment on CNN’s ‘live chat’:

Let’s talk about that dot plot. One dot was conspicuously low. A lone Fed official — this is done anonymously — penciled in sub-3% rates THIS year. We don’t know for sure who but I would bet that official rhymes with “siren.”

The post regarding the POW new issue has been updated.

PerpetualDiscounts now yield 5.67%, equivalent to 7.37% interest at the standard conversion factor of 1.3x. Long corporates yielded 4.82% on 2025-9-17, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) is now 255bp, a small (and perhaps spurious) widening from the 250bp reported September 10.

Canadian inflation wasn’t as bad as expected:

Canada’s inflation rate rose to 1.9 per cent in August, increasing by less than economists had forecasted and solidifying expectations of an interest rate cut on Wednesday.

Statistics Canada reported on Tuesday that the annual inflation rate rose from 1.7 per cent in July. The acceleration in headline inflation was driven by a smaller annual decrease gasoline prices in August relative to July.
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The Bank of Canada’s key measures of inflation continued to hover around three per cent last month. Meanwhile, inflation excluding gasoline prices rose by 2.4 per cent, down slightly from the previous three months.
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Food prices rose by 3.4 per cent, compared with 3.3 per cent in July. Shelter costs increased at a slower pace of 2.6 per cent, down from 3 per cent the previous month.

And the market reacted:

Credit market-based probabilities of a Bank of Canada rate cut on Wednesday rose following the release of Canadian inflation numbers this morning – which overall were modestly softer than expected.

Based on trading in overnight index swaps markets, traders now see about a 93% chance of a quarter point cut on Wednesday, up from about 87% prior to the inflation report, according to LSEG data.
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Here, in detail, is how implied probabilities of future interest rate moves stood in swaps markets after the inflation report. The current overnight rate is 2.75 per cent. While the bank moves in quarter-point increments, credit market implied rates fluctuate more fluidly and are constantly changing. Columns to the right are percentage probabilities of future rate moves.

Pre-Announcement

Post-Announcement

Erika McEntarfer, former commissioner at the Bureau of Labor Statistics, provided some commentary on her firing:

Her lecture at the Levy Economics Institute at Bard College, her alma mater, comes as questions swirl about the integrity of government data as Trump has sought greater control of the agency and tariffs appear to be hurting the economy.
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“Firing your chief statistician is a dangerous step,” she said. “That’s an attack on the independence of an institution arguably as important as the Federal Reserve for economic stability. It has serious economic consequences, but that they would do this with no warning — it made no sense.”

“Messing with economic data is like messing with the traffic lights and turning the sensors off. Cars don’t know where to go, traffic backs up at intersections,” she said, a nod to the concerns many economists have raised since her firing.

Before her firing, McEntarfer’s biggest concern with the monthly jobs reports and other economic reports the BLS publishes was funding shortfalls that made it harder to conduct surveys that inform the data, she said. That’s been especially true as response rates to the agency’s surveys have fallen. But that has not impacted the accuracy of the data, she said.

“But after the events of the last six weeks, I’m afraid we have to fear for the (data) dependence of the agencies themselves.”
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On Tuesday, McEntarfer said that late-responding firms were the principal reason for the negative revision that preceded her firing. That dynamic was explained by McEntarfer and her staff during their monthly pre-jobs report briefing to the White House.

She told White House economists that revisions as large as the May and June jobs data tend to occur “when the economy slows,” she said. During the briefing, White House officials asked her: Was the skew disproportionately among small firms, and when was the last time this happened?

“It was a pretty broad-based, negative skew,” she said, noting that the last time this happened was in the early months of the pandemic. Businesses were likely responding late to the survey “because they’re just too busy trying to stay alive.”

Quality costs money, Mr. Trump!

Lots of news on the Lisa Cook firing today! Apparently she told her Georgia mortgagor that it was a vacation home:

A loan estimate for an Atlanta home purchased by Lisa Cook, the Federal Reserve governor accused of mortgage fraud by the Trump administration, shows that Cook had declared the property as a “vacation home,” according to a document reviewed by Reuters.

The document, dated May 28, 2021, was issued to Cook by her credit union in the weeks before she completed the purchase and shows that she had told the lender that the Atlanta property wouldn’t be her primary residence. The document appears to counter other documentation that Cook’s critics have cited in support of their claims that she committed mortgage fraud by reporting two different homes as her primary residence, two independent real-estate experts said.
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Reuters was unable to determine whether Pulte or administration officials are aware of Cook’s Atlanta loan estimate. Spokespeople at the FHFA, the agency led by Pulte, didn’t respond to a request for comment.

The documents cited by Pulte include standardized federal mortgage paperwork which stipulates that each loan obtained by Cook for the Atlanta and Michigan properties is meant for a “primary residence.” But documentation reviewed by Reuters for the Atlanta home, filed with a court in Georgia’s Fulton County, clearly says the stipulation exists “unless Lender otherwise agrees in writing.” The loan estimate, a document prepared by the credit union, states “Property Use: Vacation Home.”
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In another point that could help Cook’s case, she never requested a tax exemption for the Georgia home as a primary residence, according to property records and a Fulton County tax official.

A separate document reviewed by Reuters, related to a federal form completed by Cook as she obtained security clearance for her role at the Federal Reserve, shows that in December 2021 she also declared the Atlanta property as a “2nd home.” Though unrelated to the mortgage, the declaration on that document, a supplement to a U.S. government national security form known as SF-86, is consistent with the claim on her Atlanta loan summary.

Well, of course Pulte and the rest of the Trump administration weren’t aware of the document. They just used their standard technique of taking things out of context and proceeding without the slightest attempt at due process … and by due process, I mean internal checking for flaws before racing off to court, not just the court action itself. The entire administration is chock-full of incompetent scum; we knew that already.

It didn’t stop them from solemnly presenting their case:

The Trump administration on Sunday renewed its request to a federal appeals court to fire Lisa Cook, a Federal Reserve governor who has faced political scrutiny in recent weeks.
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The Trump administration called Cook’s claims to stay on the board “meritless,” adding that concerns over whether Cook misrepresented her finances pose concerns as to “whether Cook can be trusted to act with forthrightness, care, and disinterest in managing the U.S. money supply.”

The next story is that she seems to have done everything right in Michigan, too:

The property tax authority in Ann Arbor, Mich., says Federal Reserve Governor Lisa Cook hasn’t broken rules for tax breaks on a home there that Cook declared her primary residence.

The finding, which came in response to a Reuters request that the city review Cook’s property records, could boost Cook’s defense against efforts by the Trump administration to remove her from the Federal Reserve board.

Ann Arbor has “no reason to believe” that Cook violated property tax rules, City Assessor Jerry Markey told Reuters. Cook has at times lived elsewhere and city records indicate she sought permission from Ann Arbor authorities to rent out the Michigan home on a short-term basis.
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Since securing a mortgage for the Michigan home in 2021, local property records show she got approval from the city to rent it out on a short-term basis in October, 2022, and again in April, 2024. Some cities, like Ann Arbor, require home owners to obtain a license to rent out their home, even on a short-term basis.

In April of 2025, months before Pulte began publicly accusing her of fraud, Cook sought approval to list the home as a long-term rental, according to local records and city officials. In July, she told the city she had enlisted a rental firm to manage the property, the officials said.

Cook now has until the end of the year to revoke the tax exemption on the home, said Markey, the Ann Arbor city assessor.
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The rates on Cook’s two mortgages show Cook didn’t enjoy discounts compared with prevailing rates available to borrowers when she negotiated the loans in 2021.

Her rate on the 15-year loan on the Michigan property was 2.875 per cent, versus a prevailing national rate in that period ranging from 2.23 per cent to 2.45 per cent, according to Freddie Mac data. And her rate on the 30-year loan on her Atlanta property was 3.25 per cent, versus a prevailing rate at the time ranging from 2.93 per cent to 3.04 per cent.

And so, not surprisingly:

President Donald Trump cannot remove Lisa Cook from the Federal Reserve’s Board of Governors for now, a federal appeals court said in an emergency ruling Monday, hours before the central bank’s two-day monetary policy meeting kicks off.
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“In this court, the government does not dispute that it failed to provide Cook even minimal process—that is, notice of the allegation against her and a meaningful opportunity to respond—before she was purportedly removed,” Judges Bradley Garcia and Michelle Childs wrote in their opinion.

“The district court issued its preliminary injunction after finding that Cook is likely to succeed on two of her claims: her substantive, statutory claim that she was removed without ‘cause’… and her procedural claim that she did not receive sufficient process prior to her removal in violation of the Due Process Clause of the Fifth Amendment,” Garcia and Childs wrote.

In his dissenting opinion, Judge Gregory Katsas wrote that “President Trump removed Cook for cause.”

But fear not, Trump fans! He managed to get his … stooge? muse? … confirmed as a Fed Governor:

Stephen Miran, one of President Donald Trump’s top economic advisers, on Monday was confirmed by the Senate to serve on the Federal Reserve’s powerful Board of Governors, hours before the Fed’s two day monetary policy meeting begins.

The Senate voted 48-47 to confirm Miran. Sen. Lisa Murkowski of Alaska was the only Republican to vote against Miran’s confirmation.

Once sworn in as a Fed governor, Miran will immediately be one of 12 officials voting on interest rate decisions.

TD Bank announced a new LRCN today:

The Toronto-Dominion Bank (“TD”) (TSX: TD) (NYSE: TD) today announced the pricing of a U.S. public offering of US$750 million 6.350% Fixed Rate Reset Limited Recourse Capital Notes, Series 6 (Non-Viability Contingent Capital (NVCC)) (the “LRCNs”). The LRCNs will be registered with the U.S. Securities and Exchange Commission (the “SEC”).

The LRCNs will bear interest at a rate of 6.350 per cent annually, payable quarterly, for the initial period ending on, but excluding, October 31, 2030. Thereafter, the interest rate on the LRCNs will reset every five years at a rate equal to the prevailing U.S. Treasury Rate plus 2.721 per cent. The LRCNs will mature on October 31, 2085. The expected closing date of the offering is September 23, 2025, subject to customary closing conditions.

Concurrently with the issuance of the LRCNs, TD will issue 750,000 Non-Cumulative 6.350% Fixed Rate Reset Preferred Shares, Series 33 (Non-Viability Contingent Capital (NVCC)) (“Preferred Shares Series 33”) to be held by Computershare Trust Company of Canada, as trustee for TD LRCN Limited Recourse Trust™ (the “Limited Recourse Trust”). In case of non-payment of interest on or principal of the LRCNs when due, the recourse of each LRCN holder will be limited to that holder’s proportionate share of the Limited Recourse Trust’s assets, which will consist of Preferred Shares Series 33 except in limited circumstances.

TD may redeem the LRCNs on October 31, 2030, and once every quarter-end thereafter, with the prior written approval of the Superintendent of Financial Institutions (Canada), in whole or in part on not less than 10 days’ and not more than 60 days’ prior notice to the LRCN holders.

I’m fascinated by the quarterly redemption option. How on earth do they get away with that? The Canadian ones don’t have that:

The Toronto-Dominion Bank (“TD”) (TSX: TD) (NYSE: TD) today announced the pricing of a Canadian public offering of C$750 million of 5.909% Non-Viability Contingent Capital (“NVCC”) Additional Tier 1 (“AT1”) Limited Recourse Capital Notes Series 5 (the “LRCNs”).
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With the prior written approval of the Superintendent of Financial Institutions (Canada), TD may redeem the LRCNs commencing on January 1, 2030, and every five years thereafter, during the period from and including January 1 to and including January 31. TD may redeem the LRCNs in whole or in part on not less than 10 days’ and not more than 60 days’ prior notice to the LRCN holders.

I checked one of their other US issues and yes, this appears to be standard (as far as a sample of two issues goes, anyway!):

The Bank may, at its option, with the prior written approval of the Superintendent of Financial Institutions appointed pursuant to the Office of the Superintendent of Financial Institutions Act (Canada) (“OSFI”) (the “Superintendent”), and without the consent of the Noteholders, redeem the Notes in cash, in whole or in part, on not less than 10 days’ and not more than 60 days’ prior written notice to the registered Noteholders, on the Initial Reset Date and each January 31, April 30, July 31 and October 31 thereafter (each, an “Optional Redemption Date”), at a redemption price which is equal to the aggregate of (i) the principal amount of the Notes to be redeemed, and (ii) any accrued and unpaid interest on such Notes up to but excluding the date of redemption (the “Redemption Price”).

US consumer inflation ticked up:

The cost of living continues to increase for Americans at a time when the job market appears to be on shakier footing, creating a complicated economic problem that could be tricky to solve.

Consumer prices rose 0.4% in August, driving the annual inflation rate to 2.9%, the highest since January, according to Bureau of Labor Statistics data released Thursday. The reading marked an acceleration from the 2.7% increase seen in July, with price hikes driving up the cost of Americans’ most basic needs.

Grocery and fuel prices shot higher in August after falling the month before. Food at home prices rose 0.6% — the highest monthly jump in nearly three years — and gas prices climbed by 1.9% after falling 2.2% the month before.
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Paychecks also aren’t going as far as they used to: Real (inflation-adjusted) hourly earnings slowed to 0.7% in August, the lowest gain in more than a year, BLS data shows.