Our political and appointed masters are once again avoiding communication with Canadians:
Lawrence Schembri isn’t the first official to warn how dangerous this could be.
But his paper, published today, is notable in that it comes from a deputy governor of the Bank of Canada, which only recently again cited the threats from the massive debt loads of Canadian households.
Mr. Schembri stresses that the system is sound, as long as there’s no “severe” shock that would drive up unemployment, and that the “imbalances” among consumers will probably ease as mortgage rates inevitably rise.
Nonetheless, he writes in the National Institute Economic Review, things have to change given, among other things, debt-to-income levels that have been at or near record levels in Canada.
The Bank of Canada states that ordinary Canadians can go fuck themselves:
Members of the media may obtain a copy of this article by contacting the National Institute of Economic and Social Research Press Office:
Yeah, I’ll bet the smart cookies in the press do a really good job of summarizing the article in all its essentials. This business of senior officials hiding their thoughts behind foreign pay walls is a real disgrace.
While we’re on the topic of autocratic central banks immune from criticism, PBOC has a familiar problem – people want to borrow money for inappropriate purposes (as determined by central bank):
The People’s Bank of China confirmed it pumped 769.5 billion yuan ($126 billion) into the country’s lenders in the last two months through a newly-created Medium-term Lending Facility. The PBOC injected 500 billion yuan in September and another 269.5 billion yuan in October via the facility — all termed at three months with an interest rate of 3.5 percent.
The announcement, included in the PBOC’s quarterly monetary policy statement, is the first official confirmation of earlier reports on the injections. Goldman Sachs Group Inc. said every 500 billion yuan in funds from the central bank is similar to a 50-basis-point cut in the required reserve ratio.
“It shows the central bank is very reluctant to loosen monetary policy, but it has to reduce financing costs for end borrowers,” said Guan Qingyou, chief macro-economic researcher with Minsheng Securities Co. in Beijing. “It doesn’t mean the new tools can replace traditional tools forever.”
The operations “affected mid-term interest rates while providing liquidity to guide commercial banks to lower their lending rates and overall social-financing costs,” the central bank said in the report published yesterday. “As liquidity generated from capital inflows eases, MLF has played a role of covering the liquidity gap and maintaining a neutral and appropriate liquidity situation.”
The facility is the latest unconventional liquidity tool as the PBOC joins the European Central Bank on a path of easing even as the U.S. begins the shift to a more normal monetary policy. The expansion builds on targeted steps to support growth in Asia’s largest economy, while stopping short of broad-based monetary loosening and fiscal stimulus that could heighten debt risks and the risk of bad loans.
It was a mixed day for the Canadian preferred share market, with PerpetualDiscounts gaining 2bp, FixedResets down 21bp and DeemedRetractibles up 12bp. Volatility was high. Volume was average.
| 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 | -0.1696 % | 2,534.7 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1696 % | 4,012.9 |
| Floater | 2.97 % | 3.07 % | 65,795 | 19.52 | 4 | -0.1696 % | 2,694.5 |
| OpRet | 4.02 % | -1.48 % | 105,291 | 0.08 | 1 | -0.0392 % | 2,748.7 |
| SplitShare | 4.25 % | 3.83 % | 61,342 | 3.77 | 5 | -0.1213 % | 3,186.8 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0392 % | 2,513.4 |
| Perpetual-Premium | 5.44 % | -7.13 % | 70,622 | 0.08 | 19 | 0.1090 % | 2,482.9 |
| Perpetual-Discount | 5.13 % | 5.03 % | 104,450 | 15.40 | 16 | 0.0159 % | 2,664.9 |
| FixedReset | 4.18 % | 3.62 % | 172,625 | 6.44 | 74 | -0.2132 % | 2,578.0 |
| Deemed-Retractible | 4.97 % | -0.14 % | 102,325 | 0.14 | 41 | 0.1200 % | 2,598.3 |
| FloatingReset | 2.55 % | -0.95 % | 62,909 | 0.08 | 6 | -0.0652 % | 2,553.8 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| ENB.PR.Y | FixedReset | -1.62 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-11-06 Maturity Price : 22.65 Evaluated at bid price : 23.70 Bid-YTW : 4.15 % |
| PWF.PR.P | FixedReset | -1.54 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-11-06 Maturity Price : 21.87 Evaluated at bid price : 22.40 Bid-YTW : 3.55 % |
| BAM.PF.B | FixedReset | -1.38 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-11-06 Maturity Price : 23.23 Evaluated at bid price : 25.05 Bid-YTW : 4.09 % |
| BAM.PR.T | FixedReset | -1.04 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-11-06 Maturity Price : 23.40 Evaluated at bid price : 24.74 Bid-YTW : 3.93 % |
| ELF.PR.F | Perpetual-Discount | 1.06 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-11-06 Maturity Price : 24.61 Evaluated at bid price : 24.87 Bid-YTW : 5.37 % |
| POW.PR.G | Perpetual-Premium | 1.09 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2017-04-15 Maturity Price : 26.00 Evaluated at bid price : 26.84 Bid-YTW : 4.14 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| IFC.PR.C | FixedReset | 164,705 | RBC crossed 93,200 at 25.56; Nesbitt crossed 50,000 at the same price. YTW SCENARIO Maturity Type : Call Maturity Date : 2016-09-30 Maturity Price : 25.00 Evaluated at bid price : 25.55 Bid-YTW : 3.25 % |
| NA.PR.W | FixedReset | 156,055 | Recent new issue. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-11-06 Maturity Price : 23.16 Evaluated at bid price : 25.06 Bid-YTW : 3.70 % |
| FTS.PR.M | FixedReset | 110,945 | Scotia crossed blocks of 25,100 shares, 16,000 shares, 40,000 and 25,000, all at 25.70. YTW SCENARIO Maturity Type : Call Maturity Date : 2019-12-01 Maturity Price : 25.00 Evaluated at bid price : 25.65 Bid-YTW : 3.67 % |
| BMO.PR.S | FixedReset | 110,782 | Scotia crossed 100,000 at 25.51. YTW SCENARIO Maturity Type : Call Maturity Date : 2019-05-25 Maturity Price : 25.00 Evaluated at bid price : 25.45 Bid-YTW : 3.53 % |
| RY.PR.I | FixedReset | 82,400 | RBC crossed blocks of 50,000 and 25,100, both at 25.68. YTW SCENARIO Maturity Type : Call Maturity Date : 2019-02-24 Maturity Price : 25.00 Evaluated at bid price : 25.67 Bid-YTW : 2.82 % |
| SLF.PR.D | Deemed-Retractible | 70,162 | Desjardins crossed 10,000 at 23.00; RBC crossed 44,200 at the same price. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.87 Bid-YTW : 5.65 % |
| There were 30 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| MFC.PR.L | FixedReset | Quote: 25.08 – 25.40 Spot Rate : 0.3200 Average : 0.2094 YTW SCENARIO |
| BAM.PR.Z | FixedReset | Quote: 26.30 – 26.66 Spot Rate : 0.3600 Average : 0.2499 YTW SCENARIO |
| TRP.PR.B | FixedReset | Quote: 18.91 – 19.26 Spot Rate : 0.3500 Average : 0.2399 YTW SCENARIO |
| PWF.PR.G | Perpetual-Premium | Quote: 25.50 – 25.98 Spot Rate : 0.4800 Average : 0.3755 YTW SCENARIO |
| GWO.PR.I | Deemed-Retractible | Quote: 23.10 – 23.44 Spot Rate : 0.3400 Average : 0.2384 YTW SCENARIO |
| PWF.PR.O | Perpetual-Premium | Quote: 26.15 – 26.48 Spot Rate : 0.3300 Average : 0.2450 YTW SCENARIO |