Spain looks as if it’s sliding down the greasy path:
A Spanish minister called on the European Central Bank to do more to stem the sovereign debt crisis as the cost of insuring the country’s bonds against default surged to a record.
“They should step up purchases of bonds,” Jaime Garcia- Legaz, a deputy minister in Luis de Guindos’s Economy Ministry, said yesterday in an interview.
His comments came as ECB officials split over the steps to tame the crisis amid growing expectations that Spain will be the next euro member to seek a European bailout. Spanish banks’ borrowings from the ECB surged almost 50 percent in March, data showed yesterday, as they took almost a third of the longer-term lending offered to euro-region institutions.
But China is inching towards convertibility:
China’s decision to widen the yuan’s trading band against the dollar for the first time since 2007 signals a drive toward a convertible currency that also saw overseas investors get bigger investment quotas this month.
The increase to 1 percent from 0.5 percent takes effect tomorrow, the People’s Bank of China said on its website yesterday. This month, regulators raised quotas for foreigners buying onshore stocks and bonds to $80 billion from $30 billion and increased the amount of yuan held offshore that can be invested locally.
Spanish troubles have led the Europeans to admit that the Euro is only a reserve currency in good times – in bad times, not so much:
European officials travel to Washington this week seeking a larger global war chest to combat the two-year debt crisis as the Spanish government battles to quell renewed market turmoil over its finances.
Three weeks after European leaders unveiled emergency euro- area funding exceeding the symbolic $1 trillion mark, concerns about Spain’s position have ratcheted the nation’s borrowing costs to the highest levels this year. Crisis-fighting resources will dominate talks at the International Monetary Fund’s spring meeting in Washington from April 20-22.
Sarkozy wants the ECB to inflate Europe out of its difficulties, although he’s very careful to cast this in a more politically correct manner:
French President Nicolas Sarkozy, speaking to the biggest rally of his re-election bid, said the European Central Bank should do more to promote economic growth, reviving an issue he raised in his 2007 campaign.
“On the question of the ECB’s role in boosting growth, we French are going to open the debate,” Sarkozy told a crowd today in central Paris that his aides estimated at more than 100,000. “If Europe is not going to sink in the international economy, it must renew with growth.”
…
“Europe must cut its debts, it has no choice,” Sarkozy said. “But between deflation and growth, it has no choice either. If it chooses deflation, it will disappear.”
Krugman is on board with the idea:
The way economist Paul Krugman sees it, Europe has two options.
It can continue with its current path, imposing austerity on governments in an attempt to rein in ever-worsening fiscal situations. Or, it can opt for the reverse, wherein the European Central Bank and eurozone leaders move to implement expansionary monetary and fiscal policies to spur growth.
Right now Europe has chosen austerity and according to Mr. Krugman, that choice is clearly showing that Europe is carrying out economic suicide.
“Europe has had several years of experience with harsh austerity programs, and the results are exactly what students of history told you would happen: such programs push depressed economies even deeper into depression,” he said in a column in the New York Times.
It was a modest day for the Canadian preferred share market, with PerpetualPremiums up 1bp, FixedResets gaining 4bp and DeemedRetractibles winning 5bp. Volatility was muted. Volume was below average, despite a fair amount of good-sized blocks.
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
|||||||
| Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
| Ratchet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 1.2106 % | 2,337.9 |
| FixedFloater | 4.44 % | 3.79 % | 34,550 | 17.79 | 1 | 0.6585 % | 3,551.2 |
| Floater | 3.09 % | 3.10 % | 43,814 | 19.48 | 3 | 1.2106 % | 2,524.3 |
| OpRet | 4.76 % | 2.97 % | 45,992 | 1.17 | 5 | -0.0077 % | 2,507.3 |
| SplitShare | 5.26 % | -1.04 % | 81,851 | 0.67 | 4 | -0.2576 % | 2,684.4 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0077 % | 2,292.7 |
| Perpetual-Premium | 5.47 % | -3.01 % | 83,825 | 0.12 | 23 | 0.0136 % | 2,222.2 |
| Perpetual-Discount | 5.17 % | 5.09 % | 130,960 | 15.19 | 10 | -0.0949 % | 2,414.4 |
| FixedReset | 5.01 % | 2.99 % | 186,841 | 2.18 | 67 | 0.0429 % | 2,396.8 |
| Deemed-Retractible | 4.96 % | 3.89 % | 199,883 | 2.87 | 46 | 0.0531 % | 2,307.9 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| BAM.PR.N | Perpetual-Discount | -1.67 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-04-16 Maturity Price : 22.59 Evaluated at bid price : 22.96 Bid-YTW : 5.20 % |
| BMO.PR.P | FixedReset | -1.04 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2015-02-25 Maturity Price : 25.00 Evaluated at bid price : 26.66 Bid-YTW : 3.25 % |
| BAM.PR.C | Floater | 1.07 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-04-16 Maturity Price : 17.00 Evaluated at bid price : 17.00 Bid-YTW : 3.10 % |
| BAM.PR.B | Floater | 1.67 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-04-16 Maturity Price : 17.05 Evaluated at bid price : 17.05 Bid-YTW : 3.10 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| TRP.PR.B | FixedReset | 168,970 | Nesbitt bought 10,000 from anonymous at 25.69 and 49,900 from RBC at 25.65. Nesbitt crossed two blocks of 50,000 each, both at 25.65. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-04-16 Maturity Price : 23.51 Evaluated at bid price : 25.50 Bid-YTW : 2.73 % |
| RY.PR.X | FixedReset | 164,386 | TD crossed blocks of 99,700 shares, 20,000 and 30,000, all at 27.15. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-08-24 Maturity Price : 25.00 Evaluated at bid price : 27.18 Bid-YTW : 2.82 % |
| ENB.PR.H | FixedReset | 163,805 | Recent new issue. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-04-16 Maturity Price : 23.19 Evaluated at bid price : 25.30 Bid-YTW : 3.55 % |
| BAM.PR.T | FixedReset | 160,896 | Scotia crossed 25,000 at 25.25. RBC crossed blocks of 99,800 and 18,000, both at 25.30. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-04-16 Maturity Price : 23.25 Evaluated at bid price : 25.25 Bid-YTW : 3.81 % |
| BMO.PR.O | FixedReset | 122,580 | Desjardins crossed 121,400 at 27.15. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-05-25 Maturity Price : 25.00 Evaluated at bid price : 27.17 Bid-YTW : 2.70 % |
| TD.PR.O | Deemed-Retractible | 108,604 | Nesbitt crossed blocks of 50,000 and 40,000, both at 26.10. YTW SCENARIO Maturity Type : Call Maturity Date : 2012-05-16 Maturity Price : 25.75 Evaluated at bid price : 25.87 Bid-YTW : -3.13 % |
| CM.PR.E | Perpetual-Premium | 101,711 | Nesbitt crossed two blocks of 50,000 each, both at 25.95. YTW SCENARIO Maturity Type : Call Maturity Date : 2012-05-16 Maturity Price : 25.25 Evaluated at bid price : 25.85 Bid-YTW : -24.07 % |
| There were 23 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| POW.PR.G | Perpetual-Premium | Quote: 25.78 – 26.49 Spot Rate : 0.7100 Average : 0.4115 YTW SCENARIO |
| BAM.PR.K | Floater | Quote: 16.95 – 17.43 Spot Rate : 0.4800 Average : 0.3475 YTW SCENARIO |
| IGM.PR.B | Perpetual-Premium | Quote: 26.40 – 26.85 Spot Rate : 0.4500 Average : 0.3218 YTW SCENARIO |
| BMO.PR.P | FixedReset | Quote: 26.66 – 26.96 Spot Rate : 0.3000 Average : 0.1802 YTW SCENARIO |
| PWF.PR.F | Perpetual-Premium | Quote: 25.12 – 25.49 Spot Rate : 0.3700 Average : 0.2695 YTW SCENARIO |
| GWO.PR.M | Deemed-Retractible | Quote: 26.17 – 26.47 Spot Rate : 0.3000 Average : 0.2038 YTW SCENARIO |