There was a good US jobs number today:
The American labor market is powering past a global slowdown as unemployment decreased to a six-year low in October and 214,000 workers were added to payrolls.
The jobless rate fell to 5.8 percent, the lowest since July 2008, from 5.9 percent in September, Labor Department figures showed today in Washington. The increase in hiring last month followed a 256,000 advance that was larger than first estimated as job gains head for their best showing in 15 years.
The report probably keeps Federal Reserve policy makers on track to raise interest rates in 2015 even as wages continued to show little momentum. Disappointing average hourly earnings help explain the voter discontent that gave the Republican party control of the Senate in this week’s election.
…
The one soft spot in the employment picture remains the inability of wages to show bigger increases. Average hourly earnings for all workers rose 0.1 percent in October from the prior month, and were up 2 percent since October 2013, less than the 2.1 percent median forecast. By this measure pay climbed 3.1 percent in the year before the recession began in December 2007
The ruble is continuing to have problems:
Russia’s central bank said it’s ready to step in at any time to prop up the ruble as the world’s worst-performing currency over the past three months extended declines.
The demand for dollars is creating conditions for risks to financial stability to emerge, the Bank of Russia in Moscow said in a statement on its website today. The monetary authority said it’s also ready to “use its other financial-market tools.”
The central bank led by Elvira Nabiullina has been struggling to stem the ruble’s decline as fighting erupts anew in Ukraine and crude oil, Russia’s main export earner, trades near a four-year low. Traders have tested how far the currency needs to drop before policy makers step in after the Bank of Russia moved closer to a free-floating exchange rate this week.
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The ruble, which slumped as much as 4.3 percent earlier today, traded down 0.2 percent at 46.7136 per dollar at 7:33 p.m. in Moscow. It has plunged 22 percent in the mast three months, the most among more than 170 currencies tracked by Bloomberg.The monetary authority sold $30 billion in October to limit the ruble fall, according to the statement, the first intervention since May. The value of Russia’s international reserves declined for 11 consecutive weeks to $428.6 billion as of Oct. 31, shrinking by a fifth since last year’s peak.
US bond dealers are losing market share to electronic exchanges:
Daily trading of corporate bonds averaged $21.8 billion in October, the most ever, according to the Securities Industry & Financial Markets Association. Meanwhile, at the 22 primary dealers that are counterparties with the Federal Reserve, it was about average for the year.
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The data suggest the biggest banks are losing a bit of their dominance over the bond market as post-crisis regulations prompt them to cut staff and inventories of riskier debt. In response, investors are changing the way they do business, transacting more frequently on electronic exchanges and stepping into trading once dominated by dealers.
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Last month, bond prices swung the most in more than a year as investors grew jittery about plunging oil prices and slowing global growth. A measure of implied volatility in Treasuries as measured by Bank of America Merrill Lynch’s MOVE index was 19 percent higher in October than the average over the prior year.
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Junk-bond trading averaged a record $8.3 billion a day in October, 26 percent higher than the average during the previous 12 months, according to the Financial Industry Regulatory Authority. The volume of speculative-grade debt traded on MarketAxess Holdings Inc.’s electronic system last month was almost 30 percent higher than the prior record.At the same time, corporate-bond trading at primary dealers averaged $111 billion a week in October, just under the $112 billion average during the prior year, Fed data show.
Part of the decline in activity at Wall Street’s biggest banks can be attributed to a drop-off in new corporate-bond sales, which tend to drive a significant portion of their business.
Another reason: The firms have been steadily cutting their inventories of riskier debt. They slashed their high-yield bond holdings 68 percent in the week ended Oct. 15 to a net $2 billion, Fed data show.
There will be plenty of grist for academic mills in sorting all this out. Increased volatility is a logical consequence of exchange trading, but there is no shortage of confounding factors!
It was a mixed day for the Canadian preferred share market today, with PerpetualDiscounts off 4bp, FixedResets up 12bp and DeemedRetractibles flat. Volatility was average. Volume was on the low side of 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 | 0.3257 % | 2,542.9 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.3257 % | 4,025.9 |
| Floater | 2.96 % | 3.06 % | 63,472 | 19.55 | 4 | 0.3257 % | 2,703.3 |
| OpRet | 4.01 % | -2.76 % | 107,804 | 0.08 | 1 | 0.1176 % | 2,751.9 |
| SplitShare | 4.24 % | 3.89 % | 58,920 | 3.77 | 5 | 0.0848 % | 3,189.5 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.1176 % | 2,516.3 |
| Perpetual-Premium | 5.44 % | -8.32 % | 69,750 | 0.08 | 19 | 0.0185 % | 2,483.4 |
| Perpetual-Discount | 5.13 % | 5.03 % | 104,489 | 15.38 | 16 | -0.0450 % | 2,663.7 |
| FixedReset | 4.18 % | 3.58 % | 170,794 | 4.54 | 74 | 0.1161 % | 2,581.0 |
| Deemed-Retractible | 4.97 % | -0.20 % | 101,716 | 0.13 | 41 | 0.0010 % | 2,598.3 |
| FloatingReset | 2.55 % | -1.43 % | 67,948 | 0.08 | 6 | 0.0065 % | 2,554.0 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| POW.PR.G | Perpetual-Premium | -1.60 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2021-04-15 Maturity Price : 25.00 Evaluated at bid price : 26.41 Bid-YTW : 4.67 % |
| FTS.PR.G | FixedReset | 1.08 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-11-07 Maturity Price : 23.37 Evaluated at bid price : 25.32 Bid-YTW : 3.57 % |
| MFC.PR.G | FixedReset | 1.35 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2016-12-19 Maturity Price : 25.00 Evaluated at bid price : 26.35 Bid-YTW : 2.07 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| NA.PR.W | FixedReset | 214,250 | Recent new issue. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-11-07 Maturity Price : 23.18 Evaluated at bid price : 25.10 Bid-YTW : 3.70 % |
| TRP.PR.E | FixedReset | 146,928 | Nesbitt crossed 50,000 at 25.38, then two blocks of 30,000 each at the same price. TD crossed 30,000 at the same price again. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-11-07 Maturity Price : 23.24 Evaluated at bid price : 25.25 Bid-YTW : 3.82 % |
| NA.PR.S | FixedReset | 130,672 | Nesbitt crossed 29,500 at 25.65; TD crossed 98,400 at the same price. YTW SCENARIO Maturity Type : Call Maturity Date : 2019-05-15 Maturity Price : 25.00 Evaluated at bid price : 25.55 Bid-YTW : 3.56 % |
| RY.PR.I | FixedReset | 109,190 | RBC crossed 13,600 at 25.67, then 50,000 and 35,200 at 25.70. TD crossed 10,000 at 25.67. YTW SCENARIO Maturity Type : Call Maturity Date : 2019-02-24 Maturity Price : 25.00 Evaluated at bid price : 25.60 Bid-YTW : 2.89 % |
| TD.PF.A | FixedReset | 95,555 | Nesbitt crossed 17,200 at 25.45, then 30,000 at 25.46. TD crossed 40,000 at 25.45. YTW SCENARIO Maturity Type : Call Maturity Date : 2019-10-31 Maturity Price : 25.00 Evaluated at bid price : 25.45 Bid-YTW : 3.54 % |
| RY.PR.H | FixedReset | 82,190 | RBC crossed 50,000 at 25.40; Scotia crossed 25,000 at the same price. YTW SCENARIO Maturity Type : Call Maturity Date : 2019-08-24 Maturity Price : 25.00 Evaluated at bid price : 25.40 Bid-YTW : 3.51 % |
| There were 27 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| FTS.PR.H | FixedReset | Quote: 20.35 – 21.19 Spot Rate : 0.8400 Average : 0.5048 YTW SCENARIO |
| POW.PR.G | Perpetual-Premium | Quote: 26.41 – 26.97 Spot Rate : 0.5600 Average : 0.3365 YTW SCENARIO |
| BAM.PF.A | FixedReset | Quote: 25.85 – 26.17 Spot Rate : 0.3200 Average : 0.2238 YTW SCENARIO |
| FTS.PR.K | FixedReset | Quote: 25.02 – 25.30 Spot Rate : 0.2800 Average : 0.2016 YTW SCENARIO |
| HSB.PR.D | Deemed-Retractible | Quote: 25.31 – 25.70 Spot Rate : 0.3900 Average : 0.3187 YTW SCENARIO |
| GWO.PR.F | Deemed-Retractible | Quote: 25.61 – 25.86 Spot Rate : 0.2500 Average : 0.1793 YTW SCENARIO |