PrefBlog

Equities got creamed today:

The MSCI All-Country World Index plunged 4.5 percent at 4:39 p.m. New York time and is down 22 percent from its May peak, while emerging-market stocks tumbled the most in almost three years. The Standard & Poor’s 500 Index lost 3.2 percent to 1,129.56 after briefly falling below its 2011 closing low. The Dow Jones Industrial Average slid the most over two days since 2008. Ten-year Treasury yields lost as much as 16 basis points to 1.6961 percent. The Dollar Index rose 1.4 percent.

The Federal Reserve said yesterday it saw “significant downside risks” in the economy and it will replace $400 billion of short-term debt with longer-term Treasuries to spur growth as the recovery falters. China’s manufacturing may shrink for a third month, U.S. jobless claims topped estimates and euro-area services and manufacturing output contracted for the first time in more than two years, reports showed.

The Europeans have figured out where to get the money to save the Euro: they’re going to print it:

European finance chiefs said they may use leverage to increase the financial firepower of their regional bailout fund as a selloff in stocks signaled renewed concern that policy makers are failing to ward off a global economic slump.
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That has fanned speculation Europe may eventually ratchet up the fund’s spending power, perhaps by using the bonds it sells as collateral to borrow more cash from the European Central Bank. Another proposal is to mimic a U.S. program established following the 2008 collapse of Lehman Brothers Holdings Inc. by allowing the fund to offer the ECB credit protection for buying more sovereign bonds.

The Canadian preferred share market got smacked today in the backwash of the equity excitement, with PerpetualDiscounts losing 71bp, FixedResets off a mere 26bp and DeemedRetractibles down 49bp. Naturally enough, given these returns, the Performance Highlights table is quite lengthy, with only one winner. Volume continued to be very sluggish.

This entry was posted on Thursday, September 22nd, 2011 at 9:37 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.