PrefBlog

TXPR closed at 540.38, up 0.70% on the day. Volume today was 2.34-million, near the median of the past 21 trading days.

CPD closed at 10.77, up 0.37% on the day. Volume was 149,950, near the median of the past 21 trading days.

ZPR closed at 8.98, up 0.90% on the day. Volume was 215,060, below the median of the past 21 trading days.

Five-year Canada yields were up a bit to 3.10% today.

There was another Canadian inflation report today:

Canada’s inflation rate eased in November, as an acceleration in grocery and rent prices was offset by a decline at the gas pump.

The Consumer Price Index rose 6.8 per cent compared to the previous year, Statistics Canada reported Wednesday. That’s down from 6.9 per cent in October, although slightly ahead of economist expectations of 6.7 per cent.

On a monthly basis, CPI rose 0.1 per cent compared to a 0.7-per-cent gain in October.

While overall CPI inflation continued trending down from a peak of 8.1 per cent reached in June, core inflation measures that strip out volatile food and gasoline prices ticked up slightly in November. That could increase the odds that the Bank of Canada raises interest rates again in January.
…
Canadians got a slight break at the gas pump, where prices fell 3.6 per cent compared to October. The price of gasoline was still 13.7 per cent higher than last November.

There was little relief at the grocery store, where prices were up 11.4 per cent compared to the previous year – a bigger annual jump than in October. The price of chicken was up 9.3 per cent, partly because of reduced global supply following an outbreak of avian influenza, Statscan noted. Coffee and tea prices were up 16.8 per cent, while cereal prices rose 15.7 per cent.

Canadians also paid more for shelter in November. Rent was up by 5.9 per cent year-over-year, compared to a 4.7 per cent increase in October. Meanwhile, mortgage interest costs rose 14.5 per over the previous year, the largest increase since 1983.
…
Of the central bank’s two preferred core inflation measures, CPI-trim remained steady at 5.3 per cent, while CPI-median ticked up 0.1 percentage point to 5 per cent.

PerpetualDiscounts now yield 6.59%, equivalent to 8.57% interest at the standard equivalency factor of 1.3x. Long corporates yielded 4.86% on 2022-12-16 and since then the closing price has changed from 15.46 to 15.20, a decline of 168bp in price, with a Duration of 12.42 (BMO doesn’t specify whether this is Macaulay or Modified Duration; I will assume Modified) which implies an increase in yield of about 14bp since 12/16 to 5.00%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has narrowed to 355bp from the 370bp reported December 14.

This entry was posted on Wednesday, December 21st, 2022 at 7:36 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.