Month: November 2025

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.

Where’s Officer Bubbles when you need him?

Sean C. Dunn, the man who pitched a sandwich at the chest of a federal agent in an unintentionally viral act of opposition to President Trump’s law enforcement policies in Washington, was acquitted on Thursday after a jury found him not guilty of misdemeanor assault.

The verdict, which arrived after roughly seven hours of deliberation, capped a nearly three-month effort to penalize Mr. Dunn for the August outburst and the resulting chase to arrest him. The government had previously failed to persuade a grand jury to charge him with a felony.

It marked a significant setback for Jeanine Pirro, the U.S. attorney in Washington, who made Mr. Dunn’s case a centerpiece of Mr. Trump’s aggressive policing and prosecution strategy in the city. Washington residents have now twice rejected the government’s case against Mr. Dunn, after they refused to indict others caught up in the president’s crackdown.

The jury determined that the launching of the 12-inch deli sandwich from what the government described as “point-blank range” was not an attempt to cause bodily injury, preventing a conviction.

Interesting piece on a policy response to low CPP deferral rates:

Few realize that by waiting until age 70, retirees can more than double their monthly pension compared with taking it at 60. Delaying CPP or QPP is like buying a secure, inflation-protected, government-backed pension at half price – a deal unmatched in the private market. It protects against the two greatest financial fears in retirement: inflation and running out of money.

Yet nine out of ten Canadians still claim by 65, even when they don’t need the money. The result: The average person gives up roughly $100,000 in lifetime income by claiming at 60 instead of 70 – about the same as the median RRSP savings at retirement.
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In a research paper series on how to improve CPP/QPP decisions that I co-authored with Doug Chandler, Barbara Sanders and Alyssa Hodder at the National Institute on Ageing, we found that for those who can afford to wait, the main reason for claiming early isn’t financial – it’s fear.

To most people, delaying CPP or QPP feels like a gamble with death: “If I die soon, I’ll get nothing.” That short-term fear overwhelms the far greater long-term risk of outliving one’s savings.
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That’s why I developed the Pension Delay Guarantee, a simple, low-cost reform that flips the psychology of fear on its head.

Here’s how it works: If someone delays CPP/QPP past 60 but dies before the higher benefits “catch up,” their estate receives a one-time payment for the missed amount.

In plain language: If you delay and die early, the guarantee ensures you don’t lose out.
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Similar pension programs show that introducing a modest death benefit is the turning point in encouraging people to choose higher, lifelong income streams. The cost is minimal – just pennies on the dollar, because few people die before the breakeven age.

It’s an interesting idea. I’ve been tossing around the idea about writing a piece for PrefLetter next spring on CPP deferral and if I do I’ll see if I can fit in a section on this idea. Clearly, the most idiotic investment metric ever invented is the “break-even date” for CPP deferral and only shows just how innumerate the average Canadian is. I mean, why not just stick your CPP monthly payment (that you wouldn’t have received if you had used it to increase your subsequent payments) under a mattress? Then your break-even date is today, so it must be a fantastic investment, right? But I have been sharply criticized in the Globe comments section for describing the metric as garbage.

I don’t really like the idea of a ‘breakeven death benefit’ in principal. It detracts from the purpose of the pension: to provide money for the rest of your life, no ifs, ands, or buts; providing a breakeven guarantee will mean less money for the rest of your life. But in matters of public policy, principle must defer to pragmatism. Earnestly educating people about how numbers work won’t do anything. Helping Little Johnny check under the bed for monsters and guaranteeing that there aren’t any just might.