The US jobs number was a fizzle:
Treasuries rose, pushing 10-year note yields down by the most in 10 months, as the economy added fewer jobs than forecast in August, damping speculation the Federal Reserve will slow bond purchases this month.
Yields fell after breaching 3 percent for the first time in two years before the report showed the economy added 169,000 jobs last month, compared with the median forecast of 180,000 in a Bloomberg News survey. Yields remained lower as Russian President Vladimir Putin said Russia will continue to assist Syria if it’s attacked. Fed policy makers are discussing whether the economy has improved enough to start reducing the asset purchases they have used to keep borrowing costs low.
Matthew Klein of Bloomberg has an interesting take on the details:
All of this is disappointing but not so disappointing that it forces the Federal Reserve to deviate from its probable reduction of asset purchases, or quantitative easing, later this month. As Chairman Ben Bernanke and other Fed officials have stated, the default expectation is that asset purchases will have stopped by the time the unemployment rate falls to 7 percent. This is because Fed policy makers no longer believe that asset purchases have a positive impact and also believe that QE comes with costs. Much of the bad news in August can be attributed to a shutdown in the porn-film industry that doesn’t reflect the underlying health of the economy. More importantly, job growth isn’t weak relative to what the Fed has tolerated for years.
One of the big surprises in today’s report was the 6 percent decline in the number of people working in the “motion picture and sound recording industries.” Wags on Twitter proceeded to list their least-favorite summer flops as explanations, but Jim Tankersley at the Washington Post had a better idea: the U.S. porn industry stopped working for a week after an actress tested positive for HIV. Once it became clear that no one else had the disease, work resumed. The one-week shutdown would affect the jobs numbers for the month of August but tells us nothing about the broader state of the U.S. economy. Had those 22,000 people been working, employment growth in August would have modestly beaten expectations. Fed officials are probably writing off this month’s weakness for that very reason.
And it is also of interest to note:
The change in total nonfarm payroll employment for June was revised from +188,000 to +172,000, and the change for July was revised from +162,000 to +104,000. With these revisions, employment gains in June and July combined were 74,000 less than previously reported.
Meanwhile in Canada, we’re all looking for part-time:
The Canadian economy created 59,200 jobs in August, reversing month-earlier losses, fuelled by growth in part-time work.
The gains were nearly three times higher than forecasts and come after Canada shed almost 40,000 jobs in July. The country’s jobless rate eased a notch to 7.1 per cent in August, Statistics Canada said Friday.
Even with last month’s bump, employment gains have averaged 12,000 per month in the past six months, less than half the pace of the 29,000 average increase in the previous six months, the agency noted.
…
Employers added 41,800 part-time positions. Full-time jobs rose by 17,400, recouping most but not all of the prior-month losses. The private sector accounted for much of the gains, boosting payrolls by 30,900, while the number of self-employed grew by 19,200 and public-sector headcount rose by 9,000.
Shaw Communications, proud issuer of SJR.PR.A, was confirmed at Pfd-3 by DBRS:
DBRS has today confirmed Shaw Communications Inc.’s (Shaw or the Company) Issuer Rating at BBB, Senior Notes rating at BBB and Preferred Shares rating at Pfd-3. All trends remain Stable. The confirmation reflects the view that the Company’s earnings profile remains adequate and its financial profile remains reasonably sound for the current rating categories. The ratings continue to be supported by Shaw’s incumbent position in western Canada, its large subscriber base and its industry-leading operating margins. The ratings also acknowledge that the intensifying competition, combined with market maturation, is placing increasing pressure on the Company’s subscriber base.
…
In terms of financial prolife, DBRS also expects Shaw to remain within a range adequate for the current rating category in the near term. The concern is that pressure on cash flow, combined with the Company’s high dividend payout, may challenge financial flexibility over the longer term. DBRS forecasts that operating cash flow will continue to grow modestly, ranging between $1.35 billion and $1.45 billion in F2014. Capex is expected to rise modestly, to above $900 million. In terms of dividends, DBRS expects Shaw to increase its declared dividend by 5-10% in F2014. As such, DBRS forecasts that the Company will likely end up free cash flow neutral before working capital in F2014. DBRS expects $750 million of annual Cable capex going forward (independent of the completion of the Company’s accelerated capex program over the next three years, which will be funded primarily through asset sales). DBRS continues to note that Shaw’s financial management objectives include maintaining net debt-to-EBITDA in the 2.0x to 2.5x range. If Shaw’s credit metrics are challenged by weakness in operating income and/or higher debt levels, the Company’s ratings could come under pressure.
It was a mixed day for the Canadian preferred share market, with PerpetualDiscounts gaining 1bp, FixedResets down 11bp and DeemedRetractibles off 4bp. The Performance Highlights table is quite lengthy considering the mildness of the overall move, heavily weighted towards losers. Volume was extremely 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 | -0.4651 % | 2,576.7 |
| FixedFloater | 4.33 % | 3.64 % | 33,832 | 18.05 | 1 | -3.4361 % | 3,831.5 |
| Floater | 2.61 % | 2.91 % | 68,297 | 19.89 | 5 | -0.4651 % | 2,782.1 |
| OpRet | 4.64 % | 3.03 % | 66,372 | 0.77 | 3 | -0.0129 % | 2,620.3 |
| SplitShare | 4.76 % | 4.82 % | 54,136 | 4.10 | 6 | 0.0906 % | 2,945.4 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0129 % | 2,396.0 |
| Perpetual-Premium | 5.93 % | 6.05 % | 115,356 | 13.78 | 2 | -0.0597 % | 2,238.3 |
| Perpetual-Discount | 5.68 % | 5.79 % | 127,682 | 14.16 | 36 | 0.0139 % | 2,286.8 |
| FixedReset | 4.93 % | 3.83 % | 241,972 | 3.86 | 85 | -0.1062 % | 2,449.9 |
| Deemed-Retractible | 5.18 % | 4.94 % | 195,625 | 6.94 | 43 | -0.0433 % | 2,347.5 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| BAM.PR.G | FixedFloater | -3.44 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-09-06 Maturity Price : 22.38 Evaluated at bid price : 21.92 Bid-YTW : 3.64 % |
| TRI.PR.B | Floater | -1.77 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-09-06 Maturity Price : 22.49 Evaluated at bid price : 22.75 Bid-YTW : 2.30 % |
| SLF.PR.G | FixedReset | -1.30 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.53 Bid-YTW : 4.21 % |
| MFC.PR.I | FixedReset | -1.14 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2017-09-19 Maturity Price : 25.00 Evaluated at bid price : 25.26 Bid-YTW : 4.10 % |
| TRP.PR.A | FixedReset | -1.13 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-09-06 Maturity Price : 24.12 Evaluated at bid price : 24.50 Bid-YTW : 4.02 % |
| BAM.PF.B | FixedReset | -1.02 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-09-06 Maturity Price : 22.85 Evaluated at bid price : 24.25 Bid-YTW : 4.62 % |
| CU.PR.F | Perpetual-Discount | -1.01 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-09-06 Maturity Price : 20.50 Evaluated at bid price : 20.50 Bid-YTW : 5.53 % |
| BAM.PF.D | Perpetual-Discount | 1.20 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-09-06 Maturity Price : 21.15 Evaluated at bid price : 21.15 Bid-YTW : 5.93 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| RY.PR.X | FixedReset | 75,630 | TD crossed 50,000 at 25.91. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-08-24 Maturity Price : 25.00 Evaluated at bid price : 25.86 Bid-YTW : 2.88 % |
| PWF.PR.S | Perpetual-Discount | 39,559 | Scotia crossed 30,000 at 22.00. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-09-06 Maturity Price : 21.71 Evaluated at bid price : 22.00 Bid-YTW : 5.51 % |
| BNS.PR.R | FixedReset | 24,772 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.13 Bid-YTW : 3.94 % |
| TRP.PR.D | FixedReset | 22,260 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-09-06 Maturity Price : 23.07 Evaluated at bid price : 24.85 Bid-YTW : 4.22 % |
| TRP.PR.B | FixedReset | 21,075 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-09-06 Maturity Price : 20.57 Evaluated at bid price : 20.57 Bid-YTW : 4.06 % |
| BNS.PR.L | Deemed-Retractible | 18,271 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.91 Bid-YTW : 4.64 % |
| There were 16 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| MFC.PR.G | FixedReset | Quote: 25.33 – 26.57 Spot Rate : 1.2400 Average : 0.7207 YTW SCENARIO |
| TCA.PR.X | Perpetual-Discount | Quote: 48.71 – 50.34 Spot Rate : 1.6300 Average : 1.2644 YTW SCENARIO |
| BAM.PR.G | FixedFloater | Quote: 21.92 – 22.70 Spot Rate : 0.7800 Average : 0.5558 YTW SCENARIO |
| BNA.PR.E | SplitShare | Quote: 25.05 – 25.49 Spot Rate : 0.4400 Average : 0.2649 YTW SCENARIO |
| PWF.PR.P | FixedReset | Quote: 23.51 – 23.99 Spot Rate : 0.4800 Average : 0.3305 YTW SCENARIO |
| CU.PR.G | Perpetual-Discount | Quote: 20.75 – 21.17 Spot Rate : 0.4200 Average : 0.2986 YTW SCENARIO |