8 Responses to “August 27, 2019”

1. Tim says:

   August 27, 2019 at 7:58 pm

   Prefs are 16% of my asset allocation plan and I’ve just been buying more as they’ve fallen over the past 11 months to maintain my weighting. I bought another chunk today to get back to 16%.

   I thought I was getting a bargain back in late December when I bought a tranche and I’m getting an even better bargain now.

   A note on the volatility of 5Y Canada yields… So far this month, with 18 trading days through today, the yield has changed by 3% or more on 11 of those days (change relative to the previous close, not absolute change).

   Seven of those days had relative movement of 5% or more!

   This is ridiculous volatility. The shaking of bond market dog is really jerking the preferred market tail around.

2. Tim says:

   August 27, 2019 at 8:18 pm

   By the way, James, August, not October. By October, maybe things will be looking up!

3. jiHymas says:

   August 27, 2019 at 8:43 pm

   August, not October.

   Eep! Wishful thinking, perhaps! I’ve fixed it.

4. Nestor says:

   August 28, 2019 at 11:02 am

   “For those who would really appreciate a bit of good news, I’ll pass along the tidbit that Queue de Cheval, my favourite steakhouse, is coming to Toronto in November.”

   well now… ain’t that a peach. i hope they have a butcher shop at the toronto location. that would certainly cut down on fuel costs for me…

5. skeptical says:

   August 28, 2019 at 11:03 am

   For example Wendy’s Co. sold $850 million of whole-business bonds yielding between 3.78% and 4.08% in June, which are likely to be refinanced in seven to 10 years. Those bonds won the second-lowest investment grade. A smaller unsecured bond that the company sold in 1995, due in 2025 and rated seven steps below investment-grade, yielded around 5.3% in June.

   https://www.bloomberg.com/news/articles/2019-08-28/companies-securitize-everything-as-investors-reach-for-yield

   Poor quality stuff is being bought over by everybody looking for yield. And here people are dumping blue chip stuff yielding anywhere between 5.5 to 6% perpetually on tax preferred basis. And these yields come from oliogpolistic and regulated businesses!
   And people say there are no investment opportunities. At this rate, some investors will consider preferreds just for the yield and not the tax advantages!

6. Jingaly says:

   August 28, 2019 at 11:54 am

   @ skeptical

   Seems that “investors” are valuing the receipt of the terminal value (i.e., the resulting likelihood of principal being repaid at maturity) on worse credits > receipt of perpetual, tax advantaged income streams on better credits. Such is life at the moment. No way to make sense of it other than to accept it and make choices in the context of one’s own portfolio objectives.

7. mbarbon says:

   August 28, 2019 at 1:52 pm

   The volatility on the 5yr bond as a % is huge.. but that is because its approaching 0. The real daily change is not that unusual.

   We are all seeing crazy things happen in the bond market as rates head to negative values. 5yr European rates are around -0.5%.. Just crazy !!! I’ll just put my money in the safety deposit box !!

   Hence why demand for 100e and 200E is increasing at 8% a year. There are more $100US bills in circulation than $1US.

8. paradon says:

   August 28, 2019 at 6:46 pm

   Yields in many parts of Europe have been less than zero for years, nothing new there. There has been no deterioration in corporate or personal finances and in fact in many segments growth is robust. If would say that the near term prospect of sub-zero rates here is zero! Even if you disagree with me you can still buy perps near or north of 6%.