It looks like there are lots of jobs in Canada!
Canadian employment rose almost six times faster than economists forecast in April, led by private- sector and full-time positions, creating the largest two-month increase in more than 30 years and leading investors to raise bets on higher interest rates.
Employment rose by 58,200 following a March jump of 82,300 that was the biggest since September 2008, Statistics Canada said today in Ottawa. The labor force grew by 72,500, lifting the jobless rate to 7.3 percent from 7.2 percent. Economists surveyed by Bloomberg News projected a 10,000 gain in jobs and 7.3 percent unemployment, according to the median forecasts.
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The construction industry posted the largest increase with 24,600 new jobs. Manufacturing added 23,800 positions and education rose by 16,800.
In an opinion piece published by the Financial Times (not in a Canadian paper, or on the bank’s website, where any two-bit Canadian scumbag could access it conveniently) Lapdog Carney says his boss makes wonderful decisions:
This provides a goal – an inflation target – that is both immutable and credible, while allowing for changes in the time horizon over which it is achieved. In short, flexible inflation targeting allows central banks to deliver what is expected while dealing with the unexpected.
An inflation target makes it easier, not harder, to take aggressive and pre-emptive policy action. The clarity and credibility of the Bank of Canada’s flexible framework guided our rapid easing during the crisis. By providing forward policy guidance conditional on the outlook for inflation, we were able to reinforce the stimulative effect of our policy and to normalise policy smoothly when conditions improved.
Central banks at the centre of the crisis have responded even more radically. Inflation targeting is allowing the Bank of England to look through short-term deviations in inflation. The adoption by the US Federal Reserve and the Bank of Japan of more explicit inflation objectives improves the effectiveness of their unconventional policies, and will be essential to manage their exit from those policies.
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Flexible inflation targeting is that framework, a policy for all seasons.
Kevin Carmichael of the Globe comments:
Yet when the time came to renew the Bank of Canada’s mandate last fall, the Harper government opted against trying something new in the immediate aftermath of a recession. Mr. Carney’s comments in the Financial Times give reason to doubt that price-level targeting ever will be tried. Canada’s economic leaders appear to believe they have found the monetary policy equivalent of nirvana.
It’s too bad. Price Level Targetting would reduce (somewhat!) the risk of long-term fixed-income investing and assist (somewhat!) in retirement planning.
Greek politics continues to fascinate:
Alexis Tsipras, the leader of Greece’s biggest anti-bailout party Syriza, turned down an appeal by political leaders to join a unity government that would avert a new election amid mounting concern of a euro exit.
“I want to underline that the refusal of this proposal isn’t coming from Syriza, but from the Greek people themselves,” Tsipras said in Athens today, in comments televised live on state-run NET TV. “The people have already rejected the bailout so no government has the right to implement it.”
Tsipras’s refusal to participate in a government that would group two pro-bailout parties with his own and the smaller Democratic Left party dims hopes of avoiding another round at the ballot-box, which polls show may catapault Syriza into first place. The onus is now on President Karolos Papoulias to try and broker a government of national unity.
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The unity government proposal by Democratic Left leader Fotis Kouvelis had received backing from Venizelos and New Democracy leader Antonis Samaras, underpinned by the two main principles of keeping the country in the euro region and renegotiating bailout conditions to boost growth.
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Kouvelis, whose party holds 19 seats in the 300-seat parliament, said the unity government would last until 2014 and would have a specific agenda to negotiate a gradual “disengagement” from bailout austerity measures. He said that a condition for Democratic Left joining the government was the participation of Syriza.
There is the usual amount of fear and bravado:
[German Finance Minister Wolfgang] Schaeuble told today’s Rheinische Post newspaper that the euro area could handle a Greek departure as “the risks of contagion for other countries of the euro zone have been reduced.”
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The risk is if Greece leaves and the save-the-euro response flops the world economy could face a sovereign-version of Lehman Brothers Holdings Inc.’s collapse. That makes Schaeuble’s confidence sound all too similar to former U.S. Treasury Secretary Henry M. Paulson’s optimism that the U.S. financial system could withstand the 2008 loss of Lehman Brothers, only to witness the deepest global recession since World War II and a 40 percent slide in the Standard & Poor’s 500 Index in six months.
I don’t know if comparisons to Lehman hold up. Is there anybody in the world who hasn’t realized a Greek default and exit hasn’t been possible, if not likely, for the past year? Lehman collapsed in the course of a week. Of course, it’s always possible that we’re in the middle of an extended train wreck that everybody can see happening and nobody can do anything about.
Groupe Aeroplan Inc., proud issuer of AIM.PR.A, has changed its name to Aimia Inc..
It was a mildly positive day for the Canadian preferred share market, with PerpetualPremiums up 4bp, FixedResets winning 10bp and DeemedRetractibles gaining 7bp. Volatility was almost non-existent. Volume was also almost non-existent.
| 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 | -0.8272 % | 2,473.1 |
| FixedFloater | 4.41 % | 3.77 % | 27,973 | 17.78 | 1 | 0.1860 % | 3,574.5 |
| Floater | 2.92 % | 2.94 % | 53,336 | 19.86 | 3 | -0.8272 % | 2,670.3 |
| OpRet | 4.77 % | 2.74 % | 49,841 | 1.10 | 5 | -0.1329 % | 2,505.9 |
| SplitShare | 5.24 % | 5.05 % | 62,727 | 0.60 | 4 | -0.0148 % | 2,699.2 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1329 % | 2,291.4 |
| Perpetual-Premium | 5.44 % | -0.13 % | 74,888 | 0.09 | 25 | 0.0388 % | 2,232.6 |
| Perpetual-Discount | 5.05 % | 4.98 % | 160,104 | 15.44 | 8 | -0.0205 % | 2,456.5 |
| FixedReset | 5.03 % | 2.94 % | 176,172 | 2.09 | 68 | 0.1020 % | 2,405.2 |
| Deemed-Retractible | 4.94 % | 3.53 % | 166,329 | 1.56 | 45 | 0.0706 % | 2,331.7 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| BAM.PR.B | Floater | -1.76 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-05-11 Maturity Price : 17.91 Evaluated at bid price : 17.91 Bid-YTW : 2.95 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| FTS.PR.E | OpRet | 249,500 | National crossed 245,200 at 26.53. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-06-01 Maturity Price : 25.75 Evaluated at bid price : 26.53 Bid-YTW : 2.74 % |
| BNS.PR.Z | FixedReset | 59,797 | TD crossed 40,000 at 25.10. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.06 Bid-YTW : 3.20 % |
| TD.PR.S | FixedReset | 52,700 | TD crossed 45,000 at 25.72. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-07-31 Maturity Price : 25.00 Evaluated at bid price : 25.74 Bid-YTW : 2.67 % |
| TD.PR.Y | FixedReset | 52,508 | TD crossed 45,000 at 25.85. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-10-31 Maturity Price : 25.00 Evaluated at bid price : 25.86 Bid-YTW : 2.82 % |
| TD.PR.K | FixedReset | 29,230 | Desjardins crossed 13,300 at 26.90. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-31 Maturity Price : 25.00 Evaluated at bid price : 26.91 Bid-YTW : 2.79 % |
| TD.PR.O | Deemed-Retractible | 23,927 | TD crossed 19,400 at 25.92. YTW SCENARIO Maturity Type : Call Maturity Date : 2012-06-10 Maturity Price : 25.75 Evaluated at bid price : 26.00 Bid-YTW : -5.28 % |
| There were 13 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| IAG.PR.C | FixedReset | Quote: 26.25 – 26.68 Spot Rate : 0.4300 Average : 0.2941 YTW SCENARIO |
| W.PR.H | Perpetual-Premium | Quote: 25.53 – 25.90 Spot Rate : 0.3700 Average : 0.2791 YTW SCENARIO |
| FTS.PR.E | OpRet | Quote: 26.53 – 26.88 Spot Rate : 0.3500 Average : 0.2781 YTW SCENARIO |
| BAM.PR.J | OpRet | Quote: 26.75 – 27.03 Spot Rate : 0.2800 Average : 0.2101 YTW SCENARIO |
| BAM.PR.B | Floater | Quote: 17.91 – 18.22 Spot Rate : 0.3100 Average : 0.2416 YTW SCENARIO |
| CIU.PR.A | Perpetual-Discount | Quote: 24.70 – 25.00 Spot Rate : 0.3000 Average : 0.2384 YTW SCENARIO |