Some timely commentary from Pew Research:
Manufacturing jobs in the United States have declined considerably over the past several decades, even as manufacturing output – the value of goods and products manufactured in the U.S. – has grown strongly. But while most Americans are aware of the decline in employment, relatively few know about the increase in output, according to a new Pew Research Center survey.
Four of every five Americans (81%) know that the total number of manufacturing jobs in the U.S. has decreased over the past three decades, according to the survey of 4,135 adults from Pew Research Center’s nationally representative American Trends Panel. But just 35% know that the nation’s manufacturing output has risen over the same time span, versus 47% who say output has decreased and 17% who say it’s stayed about the same. Only 26% of those surveyed got both questions right.
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But the news of the day was the FOMC statement:
Information received since the Federal Open Market Committee met in June indicates that the labor market has continued to strengthen and that economic activity has been rising moderately so far this year. Job gains have been solid, on average, since the beginning of the year, and the unemployment rate has declined. Household spending and business fixed investment have continued to expand. On a 12-month basis, overall inflation and the measure excluding food and energy prices have declined and are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.
…
In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1 to 1-1/4 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.
…
For the time being, the Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee expects to begin implementing its balance sheet normalization program relatively soon, provided that the economy evolves broadly as anticipated; this program is described in the June 2017 Addendum to the Committee’s Policy Normalization Principles and Plans.Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Patrick Harker; Robert S. Kaplan; Neel Kashkari; and Jerome H. Powell.
No dissent! And in the States that means something – not like in Canada, where the very idea of two people disagreeing is considered to be too embarrassing for words.
There was an immediate reaction on the FX markets:
The Bloomberg Dollar Spot Index fell to the lowest in more than a year, while the 10-year Treasury yield slipped back below 2.3 percent after the Fed held rates steady and indicated it would start unwinding its balance sheet “relatively soon.”
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… but Treasuries regained most of the ground lost yesterday:
- •The yield on 10-year Treasuries fell five basis points to 2.29 percent.
PerpetualDiscounts now yield 5.28%, equivalent to 6.86% interest at the standard equivalency factor of 1.3x. Long corporates now yield a little under 3.95%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) is now about 295bp, a significant narrowing from the 305bp reported July 19.
| 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 | -0.4619 % | 2,409.0 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.4619 % | 4,420.4 |
| Floater | 3.59 % | 3.62 % | 128,200 | 18.25 | 3 | -0.4619 % | 2,547.5 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.2272 % | 3,069.3 |
| SplitShare | 4.69 % | 4.28 % | 51,929 | 1.40 | 5 | 0.2272 % | 3,665.3 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.2272 % | 2,859.8 |
| Perpetual-Premium | 5.39 % | 4.71 % | 64,755 | 6.10 | 21 | 0.0718 % | 2,775.2 |
| Perpetual-Discount | 5.29 % | 5.28 % | 80,525 | 14.97 | 15 | 0.2639 % | 2,923.0 |
| FixedReset | 4.32 % | 4.32 % | 183,535 | 6.37 | 98 | 0.0756 % | 2,411.1 |
| Deemed-Retractible | 5.06 % | 5.34 % | 119,627 | 6.13 | 30 | 0.3193 % | 2,864.7 |
| FloatingReset | 2.53 % | 2.77 % | 43,767 | 4.27 | 10 | 0.2881 % | 2,643.7 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| PVS.PR.E | SplitShare | 1.07 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2017-08-25 Maturity Price : 26.00 Evaluated at bid price : 26.45 Bid-YTW : -6.92 % |
| TD.PR.T | FloatingReset | 1.07 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.52 Bid-YTW : 2.57 % |
| BAM.PF.D | Perpetual-Discount | 1.12 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-07-26 Maturity Price : 22.27 Evaluated at bid price : 22.55 Bid-YTW : 5.48 % |
| TRP.PR.E | FixedReset | 1.14 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-07-26 Maturity Price : 22.85 Evaluated at bid price : 23.15 Bid-YTW : 4.24 % |
| GWO.PR.I | Deemed-Retractible | 1.15 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.92 Bid-YTW : 6.70 % |
| MFC.PR.L | FixedReset | 1.17 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.70 Bid-YTW : 6.06 % |
| BAM.PR.M | Perpetual-Discount | 1.21 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-07-26 Maturity Price : 21.46 Evaluated at bid price : 21.72 Bid-YTW : 5.51 % |
| IFC.PR.A | FixedReset | 2.27 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.28 Bid-YTW : 6.64 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| CM.PR.R | FixedReset | 1,228,464 | YTW SCENARIO Maturity Type : Call Maturity Date : 2022-07-31 Maturity Price : 25.00 Evaluated at bid price : 25.10 Bid-YTW : 4.49 % |
| TRP.PR.D | FixedReset | 192,600 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-07-26 Maturity Price : 22.35 Evaluated at bid price : 22.69 Bid-YTW : 4.32 % |
| TD.PF.I | FixedReset | 151,905 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-07-26 Maturity Price : 23.17 Evaluated at bid price : 25.07 Bid-YTW : 4.43 % |
| TRP.PR.K | FixedReset | 134,207 | YTW SCENARIO Maturity Type : Call Maturity Date : 2022-05-31 Maturity Price : 25.00 Evaluated at bid price : 26.04 Bid-YTW : 4.14 % |
| TD.PF.D | FixedReset | 127,000 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-07-26 Maturity Price : 22.91 Evaluated at bid price : 23.86 Bid-YTW : 4.37 % |
| CU.PR.C | FixedReset | 122,429 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-07-26 Maturity Price : 21.72 Evaluated at bid price : 22.10 Bid-YTW : 4.49 % |
| BNS.PR.Z | FixedReset | 101,300 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.42 Bid-YTW : 4.81 % |
| There were 26 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| MFC.PR.K | FixedReset | Quote: 21.81 – 22.27 Spot Rate : 0.4600 Average : 0.3055 YTW SCENARIO |
| EIT.PR.A | SplitShare | Quote: 25.76 – 26.20 Spot Rate : 0.4400 Average : 0.3104 YTW SCENARIO |
| VNR.PR.A | FixedReset | Quote: 22.55 – 22.88 Spot Rate : 0.3300 Average : 0.2393 YTW SCENARIO |
| TRP.PR.G | FixedReset | Quote: 24.70 – 25.00 Spot Rate : 0.3000 Average : 0.2130 YTW SCENARIO |
| SLF.PR.J | FloatingReset | Quote: 17.12 – 17.40 Spot Rate : 0.2800 Average : 0.1979 YTW SCENARIO |
| BAM.PR.T | FixedReset | Quote: 20.70 – 20.98 Spot Rate : 0.2800 Average : 0.2035 YTW SCENARIO |