Parakeet Poloz chirped a little today:
The Canadian economy faces the risk of deflation and won’t reach full capacity for two years, with imbalances in household debt and the housing market gradually diminishing in that time, Bank of Canada Governor Stephen Poloz said Thursday.
He still expects a soft landing in the housing market, which will be offset by a pickup in exports and business investments.
…
“Right now, it looks to us like it will take around two years to get inflation back up to 2 per cent,” he said in a speech, peppered with nautical references, to the Canadian Club of Montreal Thursday.Canada’s annual inflation rate has slumped to 0.7 per cent, well below the lower end of the central bank’s 1-to-3 per cent target range. The central bank governor suggested he’s more concerned about inflation cooling further than a pickup.
Unemployment benefits for 1.3 million people in the U.S. are poised to end Dec. 28 as Democrats failed in their last-ditch effort to extend the jobless assistance before the House adjourns tomorrow.
Republicans who control the House refused to keep the aid flowing to the long-term unemployed without agreement on budget cuts elsewhere. Extending the benefits would cost $26 billion over two years, according to the Congressional Budget Office.
…
The failure of Congress to agree could put a dent in the nation’s economy. The Congressional Budget Office estimates that extending the program would boost growth by 0.2 percent and add about 200,000 jobs.
Of course, that’s $130,000 per job.
One might think that all this cheery news would be good for fixed income, but one might think wrong! The Canadian preferred share market got whacked today, with PerpetualDiscounts losing 33bp, FixedResets off 14bp and DeemedRetractibles down 20bp. The Performance Highlights table is relatively modest, dominated by losing BAM FixedResets. Volume was extremely high.
| 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 | -0.0935 % | 2,534.4 |
| FixedFloater | 4.40 % | 3.67 % | 40,188 | 17.95 | 1 | -0.0463 % | 3,814.6 |
| Floater | 2.95 % | 2.95 % | 62,375 | 19.87 | 3 | -0.0935 % | 2,736.4 |
| OpRet | 4.63 % | 0.69 % | 84,021 | 0.08 | 3 | -0.2056 % | 2,663.9 |
| SplitShare | 4.89 % | 4.79 % | 75,558 | 4.51 | 5 | -0.1695 % | 2,992.0 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.2056 % | 2,435.9 |
| Perpetual-Premium | 5.63 % | 5.55 % | 133,739 | 14.07 | 13 | -0.1484 % | 2,295.5 |
| Perpetual-Discount | 5.71 % | 5.71 % | 175,952 | 14.24 | 25 | -0.3344 % | 2,305.2 |
| FixedReset | 5.01 % | 3.73 % | 232,817 | 3.47 | 84 | -0.1393 % | 2,463.1 |
| Deemed-Retractible | 5.15 % | 4.27 % | 201,560 | 2.08 | 42 | -0.1979 % | 2,392.0 |
| FloatingReset | 2.63 % | 2.34 % | 315,425 | 4.41 | 5 | -0.0790 % | 2,463.6 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| BAM.PR.X | FixedReset | -2.77 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-12-12 Maturity Price : 20.69 Evaluated at bid price : 20.69 Bid-YTW : 4.60 % |
| GWO.PR.R | Deemed-Retractible | -2.09 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.54 Bid-YTW : 6.58 % |
| CIU.PR.C | FixedReset | -2.01 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-12-12 Maturity Price : 20.44 Evaluated at bid price : 20.44 Bid-YTW : 4.00 % |
| BAM.PF.B | FixedReset | -1.68 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-12-12 Maturity Price : 22.78 Evaluated at bid price : 24.05 Bid-YTW : 4.47 % |
| FTS.PR.F | Perpetual-Discount | -1.46 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-12-12 Maturity Price : 22.63 Evaluated at bid price : 22.92 Bid-YTW : 5.38 % |
| BAM.PR.T | FixedReset | -1.15 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-12-12 Maturity Price : 22.93 Evaluated at bid price : 24.00 Bid-YTW : 4.30 % |
| HSE.PR.A | FixedReset | -1.06 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-12-12 Maturity Price : 22.69 Evaluated at bid price : 23.25 Bid-YTW : 3.88 % |
| MFC.PR.F | FixedReset | 1.34 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.00 Bid-YTW : 4.90 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| ENB.PR.J | FixedReset | 436,827 | New issue settled today. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-12-12 Maturity Price : 23.08 Evaluated at bid price : 24.80 Bid-YTW : 4.33 % |
| HSB.PR.E | FixedReset | 185,716 | RBC crossed blocks of 75,000 and 100,000, both at 25.49. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-06-30 Maturity Price : 25.00 Evaluated at bid price : 25.40 Bid-YTW : 3.03 % |
| GWO.PR.I | Deemed-Retractible | 129,346 | Nesbitt crossed 50,000 at 21.40 and 25,000 at 21.25. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.20 Bid-YTW : 6.44 % |
| PWF.PR.T | FixedReset | 121,380 | Recent new issue. YTW SCENARIO Maturity Type : Call Maturity Date : 2019-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.26 Bid-YTW : 3.99 % |
| CU.PR.F | Perpetual-Discount | 89,600 | Scotia crossed 73,800 at 20.37. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-12-12 Maturity Price : 20.40 Evaluated at bid price : 20.40 Bid-YTW : 5.57 % |
| SLF.PR.G | FixedReset | 72,885 | Desjardins bought 13,000 from Scotia at 22.29, then crossed 24,900 at the same price. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.25 Bid-YTW : 4.66 % |
| There were 78 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| TD.PR.P | Deemed-Retractible | Quote: 26.05 – 26.36 Spot Rate : 0.3100 Average : 0.1812 YTW SCENARIO |
| ENB.PR.N | FixedReset | Quote: 24.11 – 24.45 Spot Rate : 0.3400 Average : 0.2501 YTW SCENARIO |
| PWF.PR.H | Perpetual-Premium | Quote: 24.92 – 25.22 Spot Rate : 0.3000 Average : 0.2123 YTW SCENARIO |
| RY.PR.B | Deemed-Retractible | Quote: 25.42 – 25.65 Spot Rate : 0.2300 Average : 0.1558 YTW SCENARIO |
| TRP.PR.B | FixedReset | Quote: 20.10 – 20.34 Spot Rate : 0.2400 Average : 0.1714 YTW SCENARIO |
| TD.PR.S | FixedReset | Quote: 24.92 – 25.09 Spot Rate : 0.1700 Average : 0.1092 YTW SCENARIO |