Banks don’t compete on price. They do, however, compete by regulation:
The federal banking watchdog has launched a formal review of cash exchange-traded funds, one of Canada’s most popular retail investments, amid a Bay Street spat that stems from surging demand for them.
The Office of the Superintendent of Financial Institutions, which regulates banks, launched its review in the fall and is studying any liquidity concerns posed by these ETFs, according to three financial industry sources. The Globe and Mail is not identifying the sources because they were not authorized to speak publicly about the matter.
…
This access has rankled some banks, according to the sources, because ETFs that offer premium rates to retail clients are likely to lure away customers from banks, hitting that sector’s profits.
…
Royal Bank of Canada RY-T -0.63%decrease
does not provide funding for any cash ETFs, and Toronto-Dominion Bank TD-T -1.45%decrease
has only minimal exposure. Both banks have blocked access to these funds on their online retail investing platforms.
BoC Senior Deputy Governor Carolyn Rogers reminds us that the policy rate ‘pause’ may be temporary:
“If we continue to see the above-average wage growth that we’ve been seeing in Canada without stronger growth in productivity, it will be difficult to bring inflation all the way down to 2 per cent,” Ms. Rogers said in a speech to the Manitoba Chambers of Commerce.
The central bank’s decision to hold its overnight rate at 4.5 per cent on Wednesday marked a turning point after eight consecutive rate hikes. However, Ms. Rogers emphasized that this is a “conditional pause,” and that the bank could restart its rate-hike campaign if inflation and economic growth don’t slow as quickly expected.
“We’ll need to see more evidence to fully assess whether monetary policy is restrictive enough to return inflation to 2 per cent,” she said.
Markets were unkind to banks today:
Wall Street’s three major stock indexes closed lower on Thursday, with bank stocks creating the biggest drag while investors also worried that Friday’s jobs report could spur more aggressive interest rate hikes from the Federal Reserve. The Canadian benchmark stock index also fell and closed at its lowest level in nearly two months.
The S&P 500′s bank index finished down 6.6% after hitting its lowest level since mid-October. Investors fled the sector after tech-industry lender SVB Financial Group launched a share sale to shore up its balance sheet due to declining deposits from startups struggling for funding.
This is due, apparently, to problems at a techno-bank:
The S&P 500 bank index was down 4.6% on Thursday as investors grew wary of the entire sector after SVB Financial Group’s share sale announcement and crypto bank Silvergate’s decision to wind down operations.
Shares in SVB, whose operating segments include Silicon Valley Bank, led declines, with a drop of 43.8% to $150.62 after it announced the $1.75 billion share sale late on Wednesday as it battles cash burn due to declining deposits from startups struggling with a venture capital funding drought.
The second biggest decliner in the S&P 500 index was another San Francisco-based bank, First Republic, which was off 14.1% after hitting its lowest level since October 2020. Also Zion Bancorp, down 8.2%.
The SPDR S&P regional banking ETF was down 6.0% after hitting its lowest point since January 2021.
| 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 | -0.5732 % | 2,500.6 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.5732 % | 4,796.2 |
| Floater | 9.01 % | 9.27 % | 49,593 | 10.02 | 2 | -0.5732 % | 2,764.1 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.2390 % | 3,337.8 |
| SplitShare | 5.04 % | 6.90 % | 51,231 | 2.73 | 7 | -0.2390 % | 3,986.0 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.2390 % | 3,110.0 |
| Perpetual-Premium | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.3277 % | 2,750.9 |
| Perpetual-Discount | 6.20 % | 6.35 % | 67,877 | 13.35 | 35 | 0.3277 % | 2,999.7 |
| FixedReset Disc | 5.50 % | 7.87 % | 88,888 | 11.72 | 61 | -0.3334 % | 2,235.3 |
| Insurance Straight | 6.22 % | 6.22 % | 86,140 | 13.62 | 20 | -0.7790 % | 2,886.5 |
| FloatingReset | 9.83 % | 10.11 % | 35,802 | 9.53 | 2 | 0.2208 % | 2,578.6 |
| FixedReset Prem | 6.56 % | 6.42 % | 214,108 | 3.96 | 2 | 0.1182 % | 2,359.0 |
| FixedReset Bank Non | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.3334 % | 2,284.9 |
| FixedReset Ins Non | 5.34 % | 7.44 % | 72,054 | 12.02 | 13 | -0.0456 % | 2,431.5 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| GWO.PR.L | Insurance Straight | -18.89 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 18.25 Evaluated at bid price : 18.25 Bid-YTW : 7.77 % |
| BN.PF.A | FixedReset Disc | -4.47 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 20.30 Evaluated at bid price : 20.30 Bid-YTW : 8.13 % |
| GWO.PR.N | FixedReset Ins Non | -3.47 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 12.50 Evaluated at bid price : 12.50 Bid-YTW : 8.52 % |
| TD.PF.B | FixedReset Disc | -2.26 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 17.30 Evaluated at bid price : 17.30 Bid-YTW : 8.29 % |
| BIP.PR.E | FixedReset Disc | -2.19 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 21.57 Evaluated at bid price : 21.91 Bid-YTW : 7.53 % |
| BN.PF.F | FixedReset Disc | -1.79 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 17.04 Evaluated at bid price : 17.04 Bid-YTW : 9.25 % |
| CM.PR.T | FixedReset Disc | -1.61 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 23.25 Evaluated at bid price : 23.76 Bid-YTW : 7.19 % |
| BN.PF.H | FixedReset Disc | -1.48 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 22.61 Evaluated at bid price : 23.25 Bid-YTW : 7.89 % |
| TRP.PR.B | FixedReset Disc | -1.24 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 11.18 Evaluated at bid price : 11.18 Bid-YTW : 9.64 % |
| PVS.PR.J | SplitShare | -1.18 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2028-02-29 Maturity Price : 25.00 Evaluated at bid price : 21.80 Bid-YTW : 7.58 % |
| MIC.PR.A | Perpetual-Discount | -1.06 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 20.44 Evaluated at bid price : 20.44 Bid-YTW : 6.76 % |
| BN.PR.K | Floater | -1.06 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 13.02 Evaluated at bid price : 13.02 Bid-YTW : 9.27 % |
| PVS.PR.H | SplitShare | -1.05 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2027-02-28 Maturity Price : 25.00 Evaluated at bid price : 22.56 Bid-YTW : 7.64 % |
| BIK.PR.A | FixedReset Disc | -1.04 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 23.26 Evaluated at bid price : 23.80 Bid-YTW : 7.83 % |
| GWO.PR.M | Insurance Straight | 1.05 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 22.93 Evaluated at bid price : 23.20 Bid-YTW : 6.26 % |
| PWF.PR.H | Perpetual-Discount | 1.10 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 22.66 Evaluated at bid price : 22.90 Bid-YTW : 6.36 % |
| PWF.PF.A | Perpetual-Discount | 1.15 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 18.48 Evaluated at bid price : 18.48 Bid-YTW : 6.18 % |
| PWF.PR.Z | Perpetual-Discount | 1.18 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 20.60 Evaluated at bid price : 20.60 Bid-YTW : 6.35 % |
| GWO.PR.S | Insurance Straight | 1.41 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 20.83 Evaluated at bid price : 20.83 Bid-YTW : 6.32 % |
| BIP.PR.F | FixedReset Disc | 1.62 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 19.50 Evaluated at bid price : 19.50 Bid-YTW : 8.30 % |
| IFC.PR.K | Perpetual-Discount | 1.64 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 21.47 Evaluated at bid price : 21.75 Bid-YTW : 6.15 % |
| MFC.PR.M | FixedReset Ins Non | 1.66 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 17.74 Evaluated at bid price : 17.74 Bid-YTW : 8.06 % |
| TRP.PR.E | FixedReset Disc | 1.96 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 15.60 Evaluated at bid price : 15.60 Bid-YTW : 9.24 % |
| CU.PR.H | Perpetual-Discount | 4.52 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 21.50 Evaluated at bid price : 21.50 Bid-YTW : 6.16 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| MFC.PR.J | FixedReset Ins Non | 154,800 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 21.87 Evaluated at bid price : 22.34 Bid-YTW : 6.96 % |
| CU.PR.J | Perpetual-Discount | 142,200 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 19.07 Evaluated at bid price : 19.07 Bid-YTW : 6.28 % |
| IAF.PR.I | FixedReset Ins Non | 76,600 | YTW SCENARIO Maturity Type : Call Maturity Date : 2023-04-30 Maturity Price : 25.00 Evaluated at bid price : 24.93 Bid-YTW : 4.70 % |
| BMO.PR.W | FixedReset Disc | 60,600 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 17.42 Evaluated at bid price : 17.42 Bid-YTW : 8.10 % |
| CU.PR.G | Perpetual-Discount | 51,400 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 18.51 Evaluated at bid price : 18.51 Bid-YTW : 6.13 % |
| CM.PR.O | FixedReset Disc | 46,460 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-09 Maturity Price : 18.16 Evaluated at bid price : 18.16 Bid-YTW : 7.92 % |
| There were 6 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| GWO.PR.L | Insurance Straight | Quote: 18.25 – 22.79 Spot Rate : 4.5400 Average : 2.4810 YTW SCENARIO |
| BN.PF.A | FixedReset Disc | Quote: 20.30 – 23.00 Spot Rate : 2.7000 Average : 1.7509 YTW SCENARIO |
| BIP.PR.E | FixedReset Disc | Quote: 21.91 – 23.00 Spot Rate : 1.0900 Average : 0.6515 YTW SCENARIO |
| BN.PF.H | FixedReset Disc | Quote: 23.25 – 24.00 Spot Rate : 0.7500 Average : 0.4848 YTW SCENARIO |
| BIP.PR.F | FixedReset Disc | Quote: 19.50 – 21.94 Spot Rate : 2.4400 Average : 2.1758 YTW SCENARIO |
| SLF.PR.J | FloatingReset | Quote: 15.61 – 16.23 Spot Rate : 0.6200 Average : 0.4438 YTW SCENARIO |