The Fed is attempting to keep uncertainty in the market, with Dudley making hawkish noises:
“We’re edging closer towards the point in time where it will be appropriate, I think, to raise interest rates further,” Dudley, who serves as vice chairman of the rate-setting Federal Open Market Committee, said Tuesday on Fox Business Network. Asked whether the FOMC could vote to raise the benchmark rate at its next meeting Sept. 20-21, Dudley said, “I think it’s possible.”
Investors expect about one rate hike between now and the end of next year, according to federal funds futures contracts, and they marked up probabilities only slightly on Tuesday. Dudley said such estimates are “too low” and that “the market is complacent about the need for gradually snugging up short-term interest rates over the next year or so.”
“We are looking for growth in the second half of the year that will be stronger than the first half,” Dudley said. “I think the labor market is going to continue to tighten, and in that environment I think we are getting closer to the day where we are going to have to snug up interest rates a little bit.”
Federal Reserve Bank of Atlanta President Dennis Lockhart said he’s confident that U.S. economic growth is accelerating, setting the stage for at least one increase in interest rates this year.
“I’m not locked in to any policy position at this stage, but if my confidence in the economy proves to be justified, I think at least one increase of the policy rate could be appropriate later this year,” Lockhart said in the text of remarks on Tuesday to the Rotary Club of Knoxville, Tennessee.
…
Lockhart described the labor market as nearing full employment, with wages showing signs of a pickup.“Recent price data hint at the firming of underlying price pressures,” he said. “I’m reasonably comfortable with a forecast of reaching 2 percent by year-end 2017.”
Lockhart said he was focused on monitoring business investment, which he said could have been hurt by uncertainty over U.S. policies. “It’s possible the election is a factor,” he said.
The median estimate of Fed officials in June was for two quarter-point increases this year, though six policy makers projected only one increase.
… and Car Wars continues to heat up:
Ford Motor Co. aims to have a fully autonomous vehicle available by 2021 for ride-hailing services, skipping the interim steps of driver-assisted technology and matching BMW’s ambitious timeframe.
The second-biggest U.S. automaker said earlier Tuesday that it’s doubling the number of people at its Silicon Valley technical center while expanding to two more buildings. Ford also invested $75 million in the leading maker of an advanced radar system to accelerate its development of self-driving cars.
Ford chose to focus on purely self-driving vehicles that don’t require a human to take over in complex situations, said Raj Nair, Ford’s head of product development. The automaker is chasing Alphabet Inc.’s Google self-driving car project as well as efforts by General Motors Co. and other automakers. Ford said today it’s investing in or collaborating with four startups on autonomous vehicles, bringing its roster of such partnerships to 40.
…
Ford and China’s top search engine company, Baidu Inc., are each investing $75 million in Velodyne Lidar Inc., the automaker said in a statement. Lidar bounces light off objects to assess shape and location, giving self-driving cars a 360-degree view of their environment with the help of cameras and traditional radar. Morgan Hill, California-based Velodyne said the money will help it improve design and expand production, making the sensors more affordable for mass adoption.
Meanwhile, here in the frozen North, some degree of success is being achieved in the regulatory campaign to shut down markets:
As Canada’s regulatory regime has evolved and, in some cases, become more onerous, many American investment dealers have reduced their trading operations in Canada. That hurts Canadian institutional investors that are trying to build diversified portfolios for ordinary Canadian clients.
…
In a recent letter to provincial securities regulators, the Canadian Bond Investors’ Association (CBIA) said its members are having difficulty trading and tracking the debt of Canadian companies issued in the U.S. market, such as the bonds of Valeant Pharmaceuticals International Inc. and Bombardier Inc.That’s because many foreign banks, including Goldman Sachs Group Inc. and Citigroup Inc., have stopped trading Canadian bonds with Canadian investors in the U.S. secondary market, the CBIA letter states. The reason derives from a 2015 amendment that prevented foreign investment dealers from being classified as both an exempt-market dealer and an international dealer.
The CBIA’s second concern pertains to the regulators’ bid to better track the sales of bonds and stocks sold without a prospectus. The change, introduced June 30, requires banks to collect more details about the issuer and the Canadian purchaser. Then, it requires a banker to certify its accuracy, creating new personal liability risks.
“It’s going to become more expensive and time-consuming to sell into Canada,” said Anthony Spadaro, a lawyer at Davies Ward Phillips & Vineberg LLP.
As the saying goes in the regulators’ offices: “The only fair market is a closed market”. And what we want is fairness, right?
| 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 | 0.5332 % | 1,701.4 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.5332 % | 3,108.1 |
| Floater | 4.83 % | 4.55 % | 79,480 | 16.16 | 4 | 0.5332 % | 1,791.2 |
| OpRet | 4.84 % | 3.08 % | 56,555 | 0.08 | 1 | 0.0000 % | 2,847.0 |
| SplitShare | 5.04 % | 4.73 % | 107,915 | 2.25 | 5 | -0.0792 % | 3,415.0 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0792 % | 2,664.5 |
| Perpetual-Premium | 5.43 % | -12.11 % | 73,801 | 0.09 | 12 | -0.0257 % | 2,708.8 |
| Perpetual-Discount | 5.09 % | 4.97 % | 106,576 | 14.98 | 26 | -0.1254 % | 2,920.9 |
| FixedReset | 4.88 % | 4.11 % | 147,998 | 7.14 | 89 | 0.0550 % | 2,090.2 |
| Deemed-Retractible | 4.97 % | 2.18 % | 120,895 | 0.09 | 32 | -0.2223 % | 2,808.3 |
| FloatingReset | 2.87 % | 4.08 % | 34,847 | 5.10 | 11 | 0.2775 % | 2,207.0 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| TD.PF.G | FixedReset | -1.52 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2021-04-30 Maturity Price : 25.00 Evaluated at bid price : 26.51 Bid-YTW : 4.15 % |
| MFC.PR.F | FixedReset | -1.48 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 14.60 Bid-YTW : 9.32 % |
| GWO.PR.F | Deemed-Retractible | -1.25 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2016-09-15 Maturity Price : 25.00 Evaluated at bid price : 25.98 Bid-YTW : -29.37 % |
| MFC.PR.J | FixedReset | -1.08 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.11 Bid-YTW : 6.35 % |
| PVS.PR.E | SplitShare | -1.01 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-10-31 Maturity Price : 25.00 Evaluated at bid price : 25.45 Bid-YTW : 5.39 % |
| TRP.PR.H | FloatingReset | 1.03 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-08-16 Maturity Price : 10.76 Evaluated at bid price : 10.76 Bid-YTW : 4.20 % |
| BAM.PR.B | Floater | 1.06 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-08-16 Maturity Price : 10.50 Evaluated at bid price : 10.50 Bid-YTW : 4.55 % |
| TRP.PR.C | FixedReset | 1.07 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-08-16 Maturity Price : 13.20 Evaluated at bid price : 13.20 Bid-YTW : 4.11 % |
| FTS.PR.G | FixedReset | 1.18 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-08-16 Maturity Price : 18.90 Evaluated at bid price : 18.90 Bid-YTW : 3.82 % |
| HSE.PR.A | FixedReset | 1.30 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-08-16 Maturity Price : 12.50 Evaluated at bid price : 12.50 Bid-YTW : 4.73 % |
| FTS.PR.K | FixedReset | 1.33 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-08-16 Maturity Price : 19.10 Evaluated at bid price : 19.10 Bid-YTW : 3.74 % |
| TRP.PR.F | FloatingReset | 1.40 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-08-16 Maturity Price : 13.78 Evaluated at bid price : 13.78 Bid-YTW : 4.46 % |
| HSE.PR.E | FixedReset | 1.40 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-08-16 Maturity Price : 20.95 Evaluated at bid price : 20.95 Bid-YTW : 5.12 % |
| FTS.PR.M | FixedReset | 1.43 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-08-16 Maturity Price : 20.62 Evaluated at bid price : 20.62 Bid-YTW : 4.00 % |
| BAM.PF.B | FixedReset | 1.49 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-08-16 Maturity Price : 19.05 Evaluated at bid price : 19.05 Bid-YTW : 4.48 % |
| GWO.PR.N | FixedReset | 1.51 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 14.82 Bid-YTW : 9.15 % |
| CU.PR.C | FixedReset | 1.55 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-08-16 Maturity Price : 18.99 Evaluated at bid price : 18.99 Bid-YTW : 3.98 % |
| HSE.PR.G | FixedReset | 1.74 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-08-16 Maturity Price : 21.05 Evaluated at bid price : 21.05 Bid-YTW : 5.07 % |
| HSE.PR.C | FixedReset | 1.93 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-08-16 Maturity Price : 19.55 Evaluated at bid price : 19.55 Bid-YTW : 5.03 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| FTS.PR.E | OpRet | 493,950 | YTW SCENARIO Maturity Type : Option Certainty Maturity Date : 2016-09-15 Maturity Price : 25.00 Evaluated at bid price : 25.29 Bid-YTW : 3.08 % |
| TD.PF.G | FixedReset | 140,988 | YTW SCENARIO Maturity Type : Call Maturity Date : 2021-04-30 Maturity Price : 25.00 Evaluated at bid price : 26.51 Bid-YTW : 4.15 % |
| BNS.PR.G | FixedReset | 94,636 | YTW SCENARIO Maturity Type : Call Maturity Date : 2021-07-25 Maturity Price : 25.00 Evaluated at bid price : 26.81 Bid-YTW : 3.97 % |
| RY.PR.Z | FixedReset | 85,800 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-08-16 Maturity Price : 19.28 Evaluated at bid price : 19.28 Bid-YTW : 3.85 % |
| RY.PR.R | FixedReset | 75,990 | YTW SCENARIO Maturity Type : Call Maturity Date : 2021-08-24 Maturity Price : 25.00 Evaluated at bid price : 26.73 Bid-YTW : 3.97 % |
| TD.PF.C | FixedReset | 75,333 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-08-16 Maturity Price : 18.96 Evaluated at bid price : 18.96 Bid-YTW : 3.97 % |
| There were 27 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| TRP.PR.E | FixedReset | Quote: 19.00 – 19.59 Spot Rate : 0.5900 Average : 0.4217 YTW SCENARIO |
| GWO.PR.F | Deemed-Retractible | Quote: 25.98 – 26.44 Spot Rate : 0.4600 Average : 0.2933 YTW SCENARIO |
| HSE.PR.G | FixedReset | Quote: 21.05 – 21.63 Spot Rate : 0.5800 Average : 0.4256 YTW SCENARIO |
| PWF.PR.T | FixedReset | Quote: 21.00 – 21.48 Spot Rate : 0.4800 Average : 0.3362 YTW SCENARIO |
| BMO.PR.M | FixedReset | Quote: 24.00 – 24.45 Spot Rate : 0.4500 Average : 0.3115 YTW SCENARIO |
| BAM.PR.S | FloatingReset | Quote: 15.10 – 15.60 Spot Rate : 0.5000 Average : 0.4060 YTW SCENARIO |