Prop traders are returning to the banks:
“In the last quarter of the year or first quarter of 2018, you will find more people leaving the hedge funds to join banks to run proprietary money,” said Jason Kennedy, chief executive officer of the Kennedy Group in London, which hires for banks and hedge funds. “The banks will become more attractive in terms of jobs and pay.”
That’s due to expectations that Donald Trump will be good for bankers. In a report released June 12, the U.S. Treasury Department urged federal agencies to re-write scores of regulations that Wall Street has frequently complained about in the seven years since the passage of the Dodd-Frank Act. They include adjusting the annual stress tests that assess whether lenders can endure economic downturns, loosening some trading rules and paring back the powers of the watchdog that polices consumer finance.
…
Hedge funds, stung by years of underperformance and revolts from investors, are increasingly under pressure to dump their traditional 2 percent management and 20 percent performance-fee model, curtailing their ability to hire and retain talent. Louis Bacon’s Moore Capital Management, Tudor Investment Corp., Och-Ziff Capital Management Group LLC, Canyon Capital Advisors and Brevan Howard were among money managers who cut fees last year. More hedge funds shuttered last year than started, a trend that continued in the first quarter of 2017, according to data from Hedge Fund Research Inc.
Global yields continued to rise today:
- •The yield on 10-year Treasuries rose three basis points to 2.30 percent. The rate climbed 16 basis points this week.
- •Benchmark yields in the U.K. increased by one basis point to 1.26 percent and were up 23 basis points this week. German yields gained one basis point to 0.47 percent.
And so the hawks continue to beat the drum for a Canadian policy rate increase:
Statistics Canada released April gross domestic product data on Friday that showed the economy expanded at a 0.2 percent monthly pace, and grew by 3.3 percent over the past 12 months. In a separate report, the Bank of Canada released a survey of business leaders that showed the strongest outlook since 2011.
The GDP figure puts the country on pace for annualized growth of between 2.5 percent and 3 percent in the second quarter, a strong follow-up to a 3.7 percent expansion in the first quarter that was by far the fastest among Group of Seven countries. The business survey, meanwhile, will give Bank of Canada Governor Stephen Poloz more confidence in the sustainability of the expansion as he considers a rate increase.
…
The data and more hawkish language is prompting a race by economists and investors to bring forward their expectations for an increase at the central bank’s rate decision July 12. Swaps trading now suggests an 84 percent chance of an increase, up from about 70 percent earlier Friday. Odds are also growing for a second round of tightening later in the year.
| 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 | 0.3374 % | 2,160.8 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.3374 % | 3,965.0 |
| Floater | 3.67 % | 3.67 % | 70,313 | 18.14 | 3 | 0.3374 % | 2,285.1 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.2586 % | 3,069.5 |
| SplitShare | 4.69 % | 4.17 % | 59,080 | 1.47 | 5 | 0.2586 % | 3,665.6 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.2586 % | 2,860.1 |
| Perpetual-Premium | 5.31 % | 3.79 % | 72,329 | 0.09 | 25 | -0.0126 % | 2,790.3 |
| Perpetual-Discount | 5.12 % | 5.08 % | 90,538 | 15.27 | 12 | -0.2592 % | 2,999.6 |
| FixedReset | 4.37 % | 4.25 % | 202,615 | 6.46 | 97 | 0.1360 % | 2,377.7 |
| Deemed-Retractible | 5.00 % | 5.09 % | 122,454 | 6.20 | 30 | -0.0273 % | 2,895.8 |
| FloatingReset | 2.65 % | 3.06 % | 51,657 | 4.32 | 10 | -0.0321 % | 2,582.8 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| TRP.PR.H | FloatingReset | -1.31 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-06-30 Maturity Price : 14.31 Evaluated at bid price : 14.31 Bid-YTW : 3.44 % |
| SLF.PR.G | FixedReset | -1.23 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 16.80 Bid-YTW : 8.53 % |
| MFC.PR.M | FixedReset | -1.13 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.84 Bid-YTW : 5.91 % |
| NA.PR.W | FixedReset | 1.03 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-06-30 Maturity Price : 21.36 Evaluated at bid price : 21.68 Bid-YTW : 4.23 % |
| BAM.PF.I | FixedReset | 1.04 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2022-03-31 Maturity Price : 25.00 Evaluated at bid price : 26.13 Bid-YTW : 3.78 % |
| PVS.PR.E | SplitShare | 1.07 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2017-07-30 Maturity Price : 26.00 Evaluated at bid price : 26.40 Bid-YTW : -9.07 % |
| NA.PR.S | FixedReset | 1.14 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-06-30 Maturity Price : 21.76 Evaluated at bid price : 22.25 Bid-YTW : 4.27 % |
| BAM.PR.R | FixedReset | 1.22 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-06-30 Maturity Price : 19.90 Evaluated at bid price : 19.90 Bid-YTW : 4.44 % |
| IFC.PR.A | FixedReset | 1.33 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 19.00 Bid-YTW : 7.39 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| BMO.PR.D | FixedReset | 338,352 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-06-30 Maturity Price : 23.14 Evaluated at bid price : 24.96 Bid-YTW : 4.40 % |
| TD.PF.H | FixedReset | 166,990 | YTW SCENARIO Maturity Type : Call Maturity Date : 2021-10-31 Maturity Price : 25.00 Evaluated at bid price : 26.33 Bid-YTW : 3.73 % |
| CM.PR.R | FixedReset | 163,640 | YTW SCENARIO Maturity Type : Call Maturity Date : 2022-07-31 Maturity Price : 25.00 Evaluated at bid price : 25.03 Bid-YTW : 4.48 % |
| BAM.PF.A | FixedReset | 59,662 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-06-30 Maturity Price : 23.69 Evaluated at bid price : 24.14 Bid-YTW : 4.41 % |
| SLF.PR.I | FixedReset | 45,705 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.74 Bid-YTW : 4.72 % |
| BMO.PR.S | FixedReset | 32,872 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-06-30 Maturity Price : 21.68 Evaluated at bid price : 22.12 Bid-YTW : 4.21 % |
| There were 23 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| SLF.PR.G | FixedReset | Quote: 16.80 – 17.50 Spot Rate : 0.7000 Average : 0.4287 YTW SCENARIO |
| TRP.PR.H | FloatingReset | Quote: 14.31 – 14.74 Spot Rate : 0.4300 Average : 0.3143 YTW SCENARIO |
| SLF.PR.J | FloatingReset | Quote: 16.08 – 16.50 Spot Rate : 0.4200 Average : 0.3360 YTW SCENARIO |
| CCS.PR.C | Deemed-Retractible | Quote: 23.90 – 24.30 Spot Rate : 0.4000 Average : 0.3333 YTW SCENARIO |
| BMO.PR.C | FixedReset | Quote: 25.60 – 25.79 Spot Rate : 0.1900 Average : 0.1251 YTW SCENARIO |
| PWF.PR.Z | Perpetual-Premium | Quote: 24.90 – 25.05 Spot Rate : 0.1500 Average : 0.0867 YTW SCENARIO |