PrefBlog

TXPR closed at 609.84, down 0.70% on the day. Volume today was 2.58-million, third-highest of the past 21 trading days.

CPD closed at 12.24, down 0.08% on the day. Volume was 87,630, above the median of the past 21 trading days.

ZPR closed at 10.22 down 0.58% on the day. Volume of 211,150 was below the median of the past 21 trading days.

Five-year Canada yields were down sharply to 3.21% today; the volatility is amazing:

U.S. Treasury yields fell to their lowest levels in almost two weeks on Thursday, as data from the euro area stoked worries about a sharp slowdown in the global economy.

Euro zone business growth has slowed significantly this month – and by much more than expected – as consumers concerned about soaring bills opted to stay at home and defer purchases to save money, a survey showed on Thursday.

In London trade, the 10-year Treasury yield fell to 3.087 % , its lowest level in almost two weeks. It was down 6 bps on the day and followed sharp falls in bond yields across the euro area.
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S&P Global’s flash euro zone Composite Purchasing Managers’ Index (PMI), seen as a good gauge of overall economic health, slumped to 51.9 in June from 54.8 in May, far below the 54.0 predicted in a Reuters poll.
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Since hitting its highest since 2011 early last week, the benchmark 10-year Treasury yield has tumbled around 40 bps, highlighting investor uncertainty in the wake of aggressive monetary tightening from the Federal Reserve

There’s a lot of weeping and wailing about how abnormally high interests rates are right now:

Rising rates could bake higher expenses into family finances for years. With a fixed-rate mortgage, you are locking in today’s higher payments in for whatever term you choose. From that perspective, the familiar old five-year fixed rate mortgage doesn’t look great.

Higher mortgage costs also make houses less affordable to buy, which is itself a retirement problem. In no way does a home guarantee a financially secure retirement. But if you do own one, you have a valuable asset to sell in order to free up money for retirement costs like care provided through in-home services or nursing homes.
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A return to normal inflation levels and an interest rate reversal would help avert this crisis, but we have a broader affordability problem to contend with in the form of lifestyle inflation.

I don’t get it. I don’t see anything abnormal at all about GOC-5 yields in the 3.00%-3.50% range when inflation is at 2% (or at least is projected to be there, according to the Canada Break-Even Inflation Rate). What I think is abnormal is fourteen years of ridiculously low yields, negative real yields, even negative NOMINAL yields, for heavens sake. Hell, it used to be that a negative yield on US Treasury Bills was breathlessly mentioned in textbooks as a gross aberation that only existed fleetingly due to special conditions in the Great Depression. And after reading this factoid, you checked it with a puzzled frown. Now, not so much.

This entry was posted on Thursday, June 23rd, 2022 at 7:12 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.