The ECB rate cut is having some immediate effects:
JPMorgan Chase & Co. (JPM), the biggest U.S. bank, closed five of its European money-market funds to new investments after the European Central Bank lowered deposit rates to zero.
JPMorgan notified clients yesterday that it won’t accept new investors or money in five euro-denominated money-market and liquidity funds because the rate cut might generate negative returns for investors, the New York-based company said in a notice to shareholders.
The ECB yesterday reduced its benchmark rate to a record low of 0.75 percent and took its deposit rate to zero, with President Mario Draghi saying the cuts may have only a “muted” economic impact.
The deposit rate cut “will almost certainly move cash bids in short-dated instruments into negative territory, and so we have taken the step to restrict subscriptions and switches into the funds in order to protect existing shareholders from yield dilution,” the company said on its website.
As Europe struggles to contain its debt crisis, the name of an American dead for more than two centuries is being invoked by those who think euro area nations will have to trade some autonomy for fiscal stability.
Alexander Hamilton, the first U.S. Treasury secretary and the face on the ten-dollar bill, offered cash-strapped states in 1790 a deal they eventually couldn’t refuse: The federal government assumed their debts in return for more centralized power. The alternative risked consigning their creditworthiness to “burst and vanish,” and a breakup, Hamilton warned.
Another solution is asset sales:
Greek Prime Minister Antonis Samaras pledged to bring his country’s economic reform plan back on track, promising sweeping state-asset sales that will boost investment and jobs, and help break the country’s recessionary spiral.
“The first battle this government must give is the battle of the obvious, the self-evident,” Samaras told lawmakers in Athens today, at the start of three days of debate on a motion of confidence in his government. “This is a government that must tell the truth from the very first, such as the truth that, once again, the fiscal adjustment program has genuinely gone off track.”
…
Asset sales not already agreed with international creditors, including rail transport and energy, will “bring investments, jobs and growth,” he said.
What about the Elgin Marbles?
Not much joy in US job numbers:
American employers added fewer workers to payrolls than forecast in June and the jobless rate stayed at 8.2 percent as the economic outlook dimmed.
The 80,000 gain in employment followed a 77,000 increase in May, Labor Department figures showed today in Washington. Economists projected a 100,000 rise, according to the median estimate in a Bloomberg News survey. Growth in private payrolls was the weakest in 10 months.
Canada did better – thanks to welfare:
Canadian employment increased by a net 7,300 positions in June and the jobless rate fell unexpectedly to 7.2 per cent, Statistics Canada said Friday in Ottawa.
The gain in jobs exceeded the forecasts of Bay Street analysts, who had also predicted that the unemployment rate would remain at 7.3 per cent. Average hourly wages for full-time workers rose 3.3 per cent from a year earlier, the fastest annual rate since the summer of 2009.
Still, while the June employment increase was fuelled by an impressive 29,000 new full-time positions, much of that hiring was in public-sector jobs in areas like education and health care.
Bankers in Dubai are among those who thank you for donating to UNICEF! There is capital flight in Afghanistan:
Afghan central bank inspector Fahim Satari stands in Kabul airport in front of a local businessman headed for Dubai, counting by hand the stack of $100 bills that police found the passenger carrying to the gate.
Satari declares the cash to be under the $20,000 limit imposed to stem the flood of money leaving through the terminal, which swelled to $4.6 billion in the year to March and equals almost one-fourth of the economy. While Satari’s team has slowed the airborne outflow, Kabul brokers who arrange informal transfers say business has jumped. In a country where only 7 percent of the population has a bank account and 15 percent of the economy depends on opium, cash is fleeing Afghanistan.
It was a mixed day for the Canadian preferred share market, with PerpetualPremiums up 10bp, FixedResets gaining 7 bp and DeemedRetractibles losing 16bp. Volatility was minor. Volume was quite low.
| 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 | -0.3003 % | 2,300.8 |
| FixedFloater | 4.58 % | 3.97 % | 21,185 | 17.32 | 1 | 0.3387 % | 3,441.7 |
| Floater | 3.16 % | 3.18 % | 74,408 | 19.32 | 3 | -0.3003 % | 2,484.2 |
| OpRet | 4.79 % | 2.67 % | 40,503 | 0.96 | 5 | -0.1541 % | 2,516.9 |
| SplitShare | 5.22 % | -7.57 % | 42,145 | 0.45 | 4 | 0.1874 % | 2,744.0 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1541 % | 2,301.4 |
| Perpetual-Premium | 5.39 % | 3.28 % | 83,676 | 0.52 | 27 | 0.1028 % | 2,250.2 |
| Perpetual-Discount | 5.02 % | 4.98 % | 114,969 | 15.47 | 7 | -0.1120 % | 2,477.9 |
| FixedReset | 5.03 % | 2.96 % | 191,597 | 2.45 | 71 | 0.0728 % | 2,410.9 |
| Deemed-Retractible | 4.99 % | 3.84 % | 146,830 | 2.86 | 46 | -0.1559 % | 2,323.9 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| IAG.PR.A | Deemed-Retractible | -2.61 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.75 Bid-YTW : 5.89 % |
| ELF.PR.G | Perpetual-Discount | -1.32 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-07-06 Maturity Price : 22.21 Evaluated at bid price : 22.45 Bid-YTW : 5.30 % |
| GWO.PR.H | Deemed-Retractible | -1.02 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.31 Bid-YTW : 5.26 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| GWO.PR.Q | Deemed-Retractible | 571,926 | New issue settled today. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.00 Bid-YTW : 5.18 % |
| CU.PR.E | Perpetual-Premium | 247,716 | Recent new issue. YTW SCENARIO Maturity Type : Call Maturity Date : 2021-09-01 Maturity Price : 25.00 Evaluated at bid price : 25.26 Bid-YTW : 4.79 % |
| BNS.PR.Y | FixedReset | 79,286 | TD bought two blocks from Nesbitt, of 32,600 and 25,000 shares, both at 25.25. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.21 Bid-YTW : 2.63 % |
| IAG.PR.G | FixedReset | 57,620 | Recent reopening. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.16 Bid-YTW : 4.20 % |
| MFC.PR.G | FixedReset | 39,923 | Nesbitt crossed 32,000 at 25.20. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.17 Bid-YTW : 4.24 % |
| MFC.PR.I | FixedReset | 31,900 | RBC crossed 27,400 at 25.00. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.90 Bid-YTW : 4.42 % |
| There were 18 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| IAG.PR.A | Deemed-Retractible | Quote: 22.75 – 23.50 Spot Rate : 0.7500 Average : 0.4657 YTW SCENARIO |
| HSB.PR.C | Deemed-Retractible | Quote: 25.59 – 26.43 Spot Rate : 0.8400 Average : 0.6326 YTW SCENARIO |
| BAM.PR.X | FixedReset | Quote: 25.05 – 25.38 Spot Rate : 0.3300 Average : 0.2131 YTW SCENARIO |
| ELF.PR.G | Perpetual-Discount | Quote: 22.45 – 22.80 Spot Rate : 0.3500 Average : 0.2373 YTW SCENARIO |
| TD.PR.G | FixedReset | Quote: 26.51 – 26.79 Spot Rate : 0.2800 Average : 0.1689 YTW SCENARIO |
| CM.PR.K | FixedReset | Quote: 26.15 – 26.48 Spot Rate : 0.3300 Average : 0.2255 YTW SCENARIO |