The world is about to end – banks are competing on price:
Just one week after Jim Flaherty stepped down, Bank of Montreal is shaking up the mortgage market, aggressively cutting its five-year rate to levels that caused the former finance minister to intervene last year.
BMO is now offering five-year fixed mortgages at 2.99 per cent, slashing its rate from 3.49 per cent. While that’s not the lowest rate in the market, BMO is the first big bank to move below the sensitive 3-per-cent threshold.
The last time a Canadian bank’s mortgage rates fell this low, in March of 2013, Mr. Flaherty stepped in and publicly called for “responsible lending” because he worried about an overheated housing market.
BMO’s rate cut comes after Toronto-Dominion Bank lowered its four-year rate to 2.97 per cent earlier in March. Last week, shortly after Mr. Flaherty stepped down, Bank of Nova Scotia also slashed its mortgage rates, and instituted a special 2.94-per-cent four-year rate.
At least one credit union also moved its five-year rate to 2.99 per cent in February.
Meanwhile, the Feds are defending their data:
Federal Employment Minister Jason Kenney defended his government’s use of Kijiji, but acknowledged there are technical concerns with the data including the need to weed out repeated postings for the same position.
“People are laughing at Kijiji, but it’s the new classified ads,” he told CTV’s Power Play. “I would just invite some of these economists – who sit in front of their spreadsheets of inadequate data trying to figure out the world – I wish they would actually go out into the real world and talk to employers like I do all the time.”
Mr. Kenney said critics should recognize the challenge of producing reliable labour data in a world of online job boards.
Let’s all square our rots for a good boo-hoo-hoo about how analysis is hard. It’s easier than reviewing the strengths and weaknesses of our analysis.
David Parkinson of the Globe points out:
Finance’s dramatic numbers don’t pass a basic sniff test. Specifically, if Canada really was suffering from acute skills shortages across a broad swath of the economy, it would manifest in significant upward pressure on wages. Those wage pressures, in general, simply aren’t there.
Year-over-year increases in Canadians’ average weekly wages have trended downward over much of the past two years, even as the country added more than 400,000 jobs. Average year-over-year wage growth last year was just 2 per cent, well below the 10-year average of 2.9 per cent and the five-year average of 2.5 per cent.
That said, there is certainly evidence of pockets where wage pressures are significant, indicative of possible skills shortages.
In Alberta, average weekly wages were up 4.6 per cent year over year in December. Two other oil-industry-heavy provinces, Newfoundland and Saskatchewan, posted increases of 3.8 per cent and 3.6 per cent, respectively. Skills- and education-heavy segments of the economy – such as business management; professional, scientific and technical services; mining and oil and gas extraction; and construction – have, indeed, shown some of the biggest year-over year wage gains.
It was a soft day for the Canadian preferred share market, with PerpetualDiscounts down 4bp, FixedResets off 1bp and DeemedRetractibles flat. Given the overall move, the Performance Highlights table is surprisingly lengthy, with a fair number of losers. Volume was average, but with some very nice block trades.
| 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 | -0.2572 % | 2,419.5 |
| FixedFloater | 4.69 % | 4.29 % | 34,447 | 17.73 | 1 | 0.0494 % | 3,619.2 |
| Floater | 3.01 % | 3.09 % | 50,749 | 19.48 | 4 | -0.2572 % | 2,612.4 |
| OpRet | 4.65 % | -0.88 % | 100,053 | 0.23 | 3 | -0.0258 % | 2,687.3 |
| SplitShare | 4.81 % | 4.11 % | 67,229 | 4.29 | 5 | -0.0159 % | 3,083.9 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0258 % | 2,457.2 |
| Perpetual-Premium | 5.64 % | -5.65 % | 93,436 | 0.08 | 11 | -0.0823 % | 2,364.5 |
| Perpetual-Discount | 5.44 % | 5.47 % | 121,179 | 14.56 | 26 | -0.0432 % | 2,449.4 |
| FixedReset | 4.69 % | 3.53 % | 230,414 | 4.33 | 79 | -0.0069 % | 2,516.5 |
| Deemed-Retractible | 5.05 % | 2.84 % | 161,477 | 0.33 | 42 | 0.0029 % | 2,471.1 |
| FloatingReset | 2.61 % | 2.56 % | 194,631 | 4.29 | 5 | 0.1041 % | 2,453.9 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| IGM.PR.B | Perpetual-Premium | -1.59 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2018-12-31 Maturity Price : 25.00 Evaluated at bid price : 25.44 Bid-YTW : 5.38 % |
| BAM.PR.K | Floater | -1.13 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-03-27 Maturity Price : 16.65 Evaluated at bid price : 16.65 Bid-YTW : 3.15 % |
| MFC.PR.B | Deemed-Retractible | -1.08 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.02 Bid-YTW : 6.22 % |
| BAM.PR.M | Perpetual-Discount | -1.07 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-03-27 Maturity Price : 20.41 Evaluated at bid price : 20.41 Bid-YTW : 5.86 % |
| GWO.PR.N | FixedReset | -1.03 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.15 Bid-YTW : 4.49 % |
| MFC.PR.F | FixedReset | 1.16 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.76 Bid-YTW : 4.46 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| TRP.PR.A | FixedReset | 856,484 | RBC crossed two blocks of 427,400 each, both at 23.29. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-03-27 Maturity Price : 22.69 Evaluated at bid price : 23.30 Bid-YTW : 3.92 % |
| MFC.PR.J | FixedReset | 201,210 | Desjardins crossed blocks of 137,500 and 50,000, both at 25.50. YTW SCENARIO Maturity Type : Call Maturity Date : 2018-03-19 Maturity Price : 25.00 Evaluated at bid price : 25.44 Bid-YTW : 3.56 % |
| SLF.PR.F | FixedReset | 200,100 | RBC crossed blocks of 70,000 shares, 50,000 and 74,600, all at 25.33. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-06-30 Maturity Price : 25.00 Evaluated at bid price : 25.27 Bid-YTW : 1.52 % |
| RY.PR.L | FixedReset | 114,040 | RBC crossed blocks of 49,000 and 20,000, both at 26.45. TD crossed 35,000 at the same price. YTW SCENARIO Maturity Type : Call Maturity Date : 2019-02-24 Maturity Price : 25.00 Evaluated at bid price : 26.38 Bid-YTW : 3.14 % |
| RY.PR.B | Deemed-Retractible | 101,684 | RBC crossed blocks of 75,000 and 20,000, both at 25.60. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-08-24 Maturity Price : 25.25 Evaluated at bid price : 25.63 Bid-YTW : 2.01 % |
| RY.PR.Z | FixedReset | 99,610 | RBC crossed 85,000 at 25.50. YTW SCENARIO Maturity Type : Call Maturity Date : 2019-05-24 Maturity Price : 25.00 Evaluated at bid price : 25.51 Bid-YTW : 3.71 % |
| There were 32 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| BAM.PR.G | FixedFloater | Quote: 20.26 – 20.90 Spot Rate : 0.6400 Average : 0.4828 YTW SCENARIO |
| PWF.PR.A | Floater | Quote: 19.44 – 19.99 Spot Rate : 0.5500 Average : 0.4058 YTW SCENARIO |
| GWO.PR.P | Deemed-Retractible | Quote: 24.97 – 25.30 Spot Rate : 0.3300 Average : 0.1985 YTW SCENARIO |
| TRP.PR.B | FixedReset | Quote: 20.15 – 20.59 Spot Rate : 0.4400 Average : 0.3206 YTW SCENARIO |
| MFC.PR.B | Deemed-Retractible | Quote: 22.02 – 22.34 Spot Rate : 0.3200 Average : 0.2170 YTW SCENARIO |
| MFC.PR.K | FixedReset | Quote: 24.49 – 24.82 Spot Rate : 0.3300 Average : 0.2276 YTW SCENARIO |