There was a good jobs number in the US:
American employers took on more workers than forecast in April and the jobless rate unexpectedly fell to a four-year low of 7.5 percent, reflecting confidence in the outlook for the world’s biggest economy.
Payrolls expanded by 165,000 following a revised 138,000 increase in March that was larger than first estimated, Labor Department figures showed today in Washington. Revisions added a total of 114,000 jobs to the counts for February and March.
There continues to be some concern amongst those who have recently realized that central bank heads should be independent:
The decision of the Harper government to name an outsider as the next governor of the Bank of Canada will raise uncomfortable questions over the sacrosanct independence of the central bank.
That’s not to suggest that Stephen Poloz isn’t qualified for the key position, only that he comes to the job with that hanging over his head.
…
The job of finding a Bank of Canada governor actually lies with the central bank’s board of directors, which interviews candidates and then presents its recommendation to the finance minister.However, this time around, Mr. Flaherty in January issued a news release saying that he would be interviewing a short list of potential governors. He actually did that in 2007, as well, but without the fanfare.
Bloomberg reminds me that:
At the European Central Bank, it was Bundesbank President Axel Weber who made the early running to replace Jean-Claude Trichet as head in 2011 before dropping out in part because he anticipated clashing with governments. The post went instead to Bank of Italy Governor Mario Draghi.
And some snippets of interest have already been reported:
Flaherty says “you’re doing great” after Poloz said: “I certainly wouldn’t express a judgement about fiscal policies in any jurisdiction.”
As well as comment in the media:
In reality, it is a very political appointment – which, in part, explains why Stephen Poloz is the new Governor.
…
But at the end of the day, it was likely Mr. Poloz’s indication that he was happy to accommodate the government’s agenda that won him the job.Nothing impresses the members of this government more than agreeing with them.
In the opinion of Moody’s analysts:
The signal sent to markets is not clear, but suggests the government wants to exercise more control over policymaking.
Julie Dickson of OSFI made a speech at the 2013 Financial Services Invitational Forum:
At OSFI, cyber risk has become one of our top concerns. A growing number of North American banks have been hit with denial of service attacks, in some cases causing websites to go down, thereby creating problems for customers trying to do everyday transactions.
…
At OSFI, we have significantly increased our supervisory resources in the Op-risk area, and have launched a number of initiatives, such as conducting in-depth reviews of institutions’ current cyber protection practices.
…
Some other countries are experiencing frothy real estate markets and have introduced floors on risk weights — sometimes around 15 per cent. Given that in Canada the uninsured mortgages would tend to be of higher quality than the average loan portfolio in other countries (because uninsured loans in Canada have maximum loan-to-value ratios of 80 per cent), we are generally comfortable with the capital being held by banks using models. OSFI is also aware that floors can become safe harbours and lead banks and supervisors to pay less attention to the ―appropriate‖ risk weight, especially when it should be well above the floor for a particular bank. Thus, our focus will continue to be on scrutinizing models currently in use.
…
The natural genetics of a bank are sometimes to give the business lines considerable leeway and to see risk management and internal audit as standing in the way of progress. This ―wiring‖ reflects the fact that the business is where the money is made – at least in the short term. A bank cannot consistently make money without regard for sound risk management. So, structures and processes need to be built as a counterbalance, and to reinforce a broader and longer perspective. Risk appetite statements are part of the new suite of tools to aid in ensuring that the bank management and the board have a 100 per cent agreement on the balance of power in the institution and the overall risk stance.
It was a mixed day for the Canadian preferred share market, with PerpetualPremiums gaining 2bp, FixedResets off 7bp and DeemedRetractibles up 5bp. Volatility was minimal. Volume was ludicrously low – did everybody take off early for the first warm weekend?
| 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 | -0.0126 % | 2,620.6 |
| FixedFloater | 3.94 % | 3.17 % | 33,441 | 18.77 | 1 | 0.0000 % | 4,168.0 |
| Floater | 2.66 % | 2.86 % | 83,505 | 20.07 | 4 | -0.0126 % | 2,829.5 |
| OpRet | 4.80 % | 0.25 % | 60,909 | 0.16 | 5 | -0.0695 % | 2,610.4 |
| SplitShare | 4.79 % | 4.07 % | 109,885 | 4.09 | 5 | 0.0001 % | 2,964.9 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0695 % | 2,387.0 |
| Perpetual-Premium | 5.20 % | 2.95 % | 87,018 | 0.45 | 31 | 0.0218 % | 2,383.8 |
| Perpetual-Discount | 4.83 % | 4.85 % | 180,552 | 15.68 | 4 | 0.1826 % | 2,691.1 |
| FixedReset | 4.88 % | 2.71 % | 241,050 | 3.74 | 81 | -0.0706 % | 2,514.8 |
| Deemed-Retractible | 4.87 % | 3.39 % | 136,150 | 0.96 | 44 | 0.0521 % | 2,459.7 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| CU.PR.C | FixedReset | -1.40 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2017-06-01 Maturity Price : 25.00 Evaluated at bid price : 26.70 Bid-YTW : 2.43 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| TRP.PR.B | FixedReset | 65,791 | Desjardins crossed 49,700 at 24.91. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-05-03 Maturity Price : 23.51 Evaluated at bid price : 24.90 Bid-YTW : 2.45 % |
| W.PR.H | Perpetual-Premium | 43,506 | Nesbitt crossed 41,200 at 25.68. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-06-02 Maturity Price : 25.00 Evaluated at bid price : 25.60 Bid-YTW : -19.13 % |
| W.PR.J | Perpetual-Premium | 41,640 | Nesbitt crossed 28,200 at 25.40. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-06-02 Maturity Price : 25.00 Evaluated at bid price : 25.45 Bid-YTW : -12.39 % |
| TD.PR.P | Deemed-Retractible | 40,400 | Nesbitt crossed 40,000 at 26.50. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-06-02 Maturity Price : 26.00 Evaluated at bid price : 26.45 Bid-YTW : -14.78 % |
| ENB.PR.F | FixedReset | 29,981 | YTW SCENARIO Maturity Type : Call Maturity Date : 2018-06-01 Maturity Price : 25.00 Evaluated at bid price : 25.92 Bid-YTW : 3.37 % |
| RY.PR.X | FixedReset | 22,640 | TD crossed 20,000 at 26.27. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-08-24 Maturity Price : 25.00 Evaluated at bid price : 26.22 Bid-YTW : 2.19 % |
| There were 10 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| CIU.PR.C | FixedReset | Quote: 25.03 – 25.64 Spot Rate : 0.6100 Average : 0.4870 YTW SCENARIO |
| PWF.PR.P | FixedReset | Quote: 25.56 – 25.94 Spot Rate : 0.3800 Average : 0.2727 YTW SCENARIO |
| MFC.PR.I | FixedReset | Quote: 26.35 – 26.60 Spot Rate : 0.2500 Average : 0.1481 YTW SCENARIO |
| CU.PR.C | FixedReset | Quote: 26.70 – 27.00 Spot Rate : 0.3000 Average : 0.2024 YTW SCENARIO |
| IAG.PR.C | FixedReset | Quote: 25.65 – 25.98 Spot Rate : 0.3300 Average : 0.2441 YTW SCENARIO |
| W.PR.J | Perpetual-Premium | Quote: 25.45 – 25.76 Spot Rate : 0.3100 Average : 0.2308 YTW SCENARIO |