TXPR closed at 527.13, down 0.69% on the day after setting a new 52-week low. Volume today was 1.29-million, second-highest of the past 21 trading days.
CPD closed at 10.47, down 0.95% on the day after setting a new 52-week low. Volume was 48,880, near the median of the past 21 trading days.
ZPR closed at 8.645, down 0.52% on the day after setting a new 52-week low. Volume was 170,500, above the median of the past 21 trading days.
Five-year Canada yields up to 3.50% today.
The CPPIB did well (if we trust the private market valuations!):
Canada Pension Plan Investment Board reported a 1.3-per-cent return in its last fiscal year as gains from private investments helped offset weak performance from public stocks and bonds.
The plan’s modest results beat a composite benchmark it uses to measure its performance, which gained 0.1 per cent in the fiscal year that ended March 31.
…
By contrast, private equity returned 6.8 per cent, credit investments gained 6 per cent, and infrastructure investments – which often perform well when inflation rises – were up 5.6 per cent.
…
In the fiscal year, CPPIB’s operating expenses increased by $112-million as it hired more staff and invested in technology and data infrastructure. But its costs are relatively steady over five years when measured as a percentage of its assets, at an average of 0.29 per cent.
Luis de Guindos, Vice-President of the European Central Bank, gave a speech titled Towards a stronger non-bank financial sector:
Well-developed and broad capital markets can help to efficiently allocate capital to the most innovative and productive companies, thereby contributing to economic growth. Market-based finance also allows companies to diversify their funding sources and facilitates increased cross-border funding. This can result in greater risk-sharing across the euro area and contribute to overall financial resilience. Investment funds, for instance, play an important role in financial integration. However, if we are to strengthen the euro area financial sector’s capacity to attract and intermediate funding for euro area companies, we must make further progress on the banking union and continue to develop the capital markets union (CMU).
The CMU seeks to integrate national capital markets into a genuine single market, in turn making financing more accessible to EU companies and transforming Europe into an even more attractive place to save and invest. Consequently, this means scaling up market-based financing in the EU, leading to a larger role for the non-bank financial sector than is already the case.
…
In the euro area, the combined total assets of investment funds, money market funds (MMFs), insurance corporations, pension funds and financial vehicle corporations have doubled since the global financial crisis from €15 trillion to €31 trillion.The sector has become increasingly important in financing the euro area real economy in recent years. As
a share of credit granted by all financial institutions, credit granted by non-banks to euro area nonfinancial corporates has almost doubled since 2008, from 15% to 26% at the end of last year.
…
First, the strong growth of the non-bank financial sector – especially the asset management industry – over the past 15 years has been accompanied by an increase in liquidity mismatches.A key contributing factor is that investors in open-ended funds – which account for the largest part of the investment fund sector – can typically redeem their shares on a daily basis without prior notice. This creates a liquidity mismatch especially in funds that invest in relatively illiquid assets, such as high-yield corporate bonds.
…
The second vulnerability in the non-bank financial system relates to financial and synthetic leverage, which can amplify shocks and create spillover risks for banks.We saw an example of this with Archegos Capital Management, which defaulted on its losses from leveraged equity trades in March 2021. The fact that Archegos used total return swaps to generate synthetic exposures highlights another challenge in identifying leverage, as leverage can be embedded in derivative exposures. While the Archegos default had only a limited impact on the broader financial system, the event nevertheless highlighted possible contagion channels to banks through the provision of synthetic leverage by prime brokers.
…
The third vulnerability in the non-bank sector results from an insufficient preparedness to meet large demand for liquidity, especially from margin calls – as the recent stress episode in the UK pension fund sector has highlighted.In the United Kingdom, pension funds had made extensive use of leveraged strategies to hedge long-term interest rate risk and free up capital to generate higher returns in their investment portfolios.
…
First, we need to reduce the risks of mismatch between funds’ asset liquidity and their redemption policies. Funds need to ensure that their redemption policies are closely aligned with the liquidity of their portfolio assets.For instance, funds that invest in illiquid assets, such as real estate or private debt, should have commensurate redemption notice periods to mitigate liquidity risk. At the same time, funds that offer daily redemptions should be required to invest in sufficiently liquid assets and maintain high liquidity management standards to enable them to meet redemption requests under both normal and stressed market conditions.
…
Second, we must renew our efforts to reform the MMF sector in the EU.
…
Third, it is essential to address risks from non-bank leverage from various perspectives.
…
Fourth, there is a need to enhance margining practices and liquidity preparedness to meet margin calls.Since the March 2020 market turmoil, the non-bank financial sector has been repeatedly confronted with periods of high market volatility and surging liquidity needs from margin calls. Increasing the transparency and predictability of initial margin models and assessing their responsiveness to market stress can help reduce the procyclical demand for liquidity. In addition, ensuring robust liquidity risk management and contingency planning frameworks would mitigate risks associated with inadequate liquidity preparedness
BIS has released a working paper by Claudio Borio titled Getting up from the floor:
Focus
How do central banks set interest rates? While the techniques are appreciated only by experts, their implications for the financial system can be surprisingly wide-ranging. This paper examines the evolution of techniques since the Great Financial Crisis (GFC), evaluates their merits and proposes a way forward.Contribution
Since the GFC, a growing number of central banks have adopted abundant reserves systems (“floors”) to set the interest rate. How do these compare with the pre-GFC scarce reserve systems (“corridors”)? The paper’s contribution is to explore this question with fresh eyes and with reference to the broader question of the optimal size and composition of central bank balance sheets.Findings
In contrast to a widely held view, there are good reasons for returning to scarce reserve systems (“corridors”). First, the costs of floor systems take considerable time to appear, are likely to grow and tend to be less visible. They can be attributed to features of the environment which, in fact, are to a large extent a consequence of the systems themselves. Second, for much the same reasons, there is a risk of grossly overestimating the implementation difficulties of corridor systems, in particular the instability of the demand for reserves. Third, there is no need to wait for the central bank balance sheet to shrink before moving in that direction: for a given size, the central bank can adjust the composition of its liabilities. Ultimately, the design of the implementation system should follow from a strategic view of the central bank’s balance sheet. A useful guiding principle is that its size should be as small as possible, and its composition as riskless as possible, in a way that is compatible with the central bank fulfilling its mandate effectively.Abstract
Since the Great Financial Crisis, a growing number of central banks have adopted abundant reserves systems (“floors”) to set the interest rate. However, there are good grounds to return to scarce reserve systems (“corridors”). First, the costs of floor systems take considerable time to appear, are likely to grow and tend to be less visible. They can be attributed to independent features of the environment which, in fact, are to a significant extent a consequence of the systems themselves. Second, for much the same reasons, there is a risk of grossly overestimating the implementation difficulties of corridor systems, in particular the instability of the demand for reserves. Third, there is no need to wait for the central bank balance sheet to shrink before moving in that direction: for a given size, the central bank can adjust the composition of its liabilities. Ultimately, the design of the implementation system should follow from a strategic view of the central bank’s balance sheet. A useful guiding principle is that its size should be as small as possible, and its composition as riskless as possible, in a way that is compatible with the central bank fulfilling its mandate effectively.
As noted on May 15 the BoC adopted a corridor system at the beginning of the pandemic and has decided to keep it.
BIS has released a Bulletin by Rodney Garratt and Hyun Song Shin titled Stablecoins versus tokenised deposits: implications for the singleness of money:
Key takeaways
- • Private tokenised monies that circulate as bearer instruments, like stablecoins, may entail departures in their relative exchange values away from par in violation of the “singleness of money”.
- • In contrast, tokenised deposits that do not circulate as bearer instruments but rather settle in central bank money are more conducive to singleness.
- • Tokenised deposits may enable expanded functionality by building on the capacity of programmable ledgers to introduce contingent execution and composability of transactions
A cornerstone of the modern monetary system is the “singleness of money”. Singleness ensures that monetary exchange is not subject to fluctuating exchange rates between different forms of money, whether they be privately issued money (eg deposits) or publicly issued money (eg cash). With singleness of money, there is an unambiguous unit of account that underpins all economic transactions in society.
Ruling out exchange rates between different forms of money allows money to serve its role as a coordinating device for economic activity. In this context, “approximate singleness” is an oxymoron. Small departures from par introduce frictions in trade and exchange that are amplified when they reverberate through economic transactions. Ultimately, such amplifications of frictions can be debilitating for monetary exchange (Morris and Shin (2012), Doepke and Schneider (2017))
…
This Bulletin evaluates two models of private tokenised money. In both cases, private money tokens represent liabilities of the issuer, and the holder has a claim on the issuer for redemption at par value in the sovereign unit of account. However, the transfer process differs in the two cases. In one model, which resembles current asset-backed stablecoins, private tokenised money circulates as a digital bearer instrument. Such a model may not be compatible with singleness for reasons to be outlined below. The second model – that of “tokenised deposits” – does not involve a direct transfer of claims. The model of tokenised deposits envisages participants to be customers of regulated financial institutions (such as banks), and transfers are recorded at the individual bank level and settled automatically using tokenised central bank money (ie CBDC). Under this model of non-transferable liabilities, a person or firm knows that when they accept a payment from the customer of any bank, the payment will be credited to their own account at face value. Settlement using central bank money is the key feature that promotes singleness.
PerpetualDiscounts now yield 6.44%, equivalent to 8.37% interest at the standard equivalency factor of 1.3x. Long corporates yielded 4.91% on 2023-5-12 and since then the closing price has changed from 15.40 to 14.89, a decline of 331bp in price, with a Duration of 12.39 (BMO doesn’t specify whether this is Macaulay or Modified Duration; I will assume Modified) which implies an increase in yield of about 27bp since 5/12 to 5.18%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has narrowed slightly (and perhaps spuriously) to about 320bp from the 325bp reported May 17.
| 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 | 0.0000 % | 2,176.8 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0000 % | 4,175.0 |
| Floater | 10.35 % | 10.63 % | 48,339 | 8.97 | 2 | 0.0000 % | 2,406.1 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0611 % | 3,354.0 |
| SplitShare | 5.01 % | 6.95 % | 40,666 | 2.56 | 7 | -0.0611 % | 4,005.3 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0611 % | 3,125.1 |
| Perpetual-Premium | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.6496 % | 2,693.8 |
| Perpetual-Discount | 6.33 % | 6.44 % | 41,978 | 13.25 | 34 | -0.6496 % | 2,937.4 |
| FixedReset Disc | 6.03 % | 8.45 % | 84,829 | 11.24 | 63 | -0.6935 % | 2,066.5 |
| Insurance Straight | 6.26 % | 6.39 % | 60,431 | 13.29 | 19 | -0.6777 % | 2,873.4 |
| FloatingReset | 10.78 % | 11.43 % | 52,642 | 8.42 | 2 | -0.3082 % | 2,362.7 |
| FixedReset Prem | 6.99 % | 6.87 % | 329,832 | 12.49 | 1 | -0.5536 % | 2,313.6 |
| FixedReset Bank Non | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.6935 % | 2,112.4 |
| FixedReset Ins Non | 6.13 % | 7.66 % | 79,546 | 11.68 | 11 | -0.8027 % | 2,275.2 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| TRP.PR.A | FixedReset Disc | -6.09 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 12.50 Evaluated at bid price : 12.50 Bid-YTW : 10.38 % |
| FTS.PR.H | FixedReset Disc | -4.92 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 11.60 Evaluated at bid price : 11.60 Bid-YTW : 9.58 % |
| MFC.PR.I | FixedReset Ins Non | -4.02 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 21.23 Evaluated at bid price : 21.23 Bid-YTW : 7.34 % |
| IFC.PR.C | FixedReset Disc | -3.70 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 15.60 Evaluated at bid price : 15.60 Bid-YTW : 8.88 % |
| PWF.PR.H | Perpetual-Discount | -2.65 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 21.81 Evaluated at bid price : 22.05 Bid-YTW : 6.59 % |
| SLF.PR.C | Insurance Straight | -2.53 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 18.52 Evaluated at bid price : 18.52 Bid-YTW : 6.12 % |
| TRP.PR.E | FixedReset Disc | -2.49 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 14.11 Evaluated at bid price : 14.11 Bid-YTW : 10.03 % |
| CM.PR.O | FixedReset Disc | -2.16 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 16.30 Evaluated at bid price : 16.30 Bid-YTW : 8.65 % |
| TRP.PR.D | FixedReset Disc | -1.93 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 14.76 Evaluated at bid price : 14.76 Bid-YTW : 9.82 % |
| RY.PR.N | Perpetual-Discount | -1.81 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 21.11 Evaluated at bid price : 21.11 Bid-YTW : 5.84 % |
| BMO.PR.F | FixedReset Disc | -1.79 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 21.97 Evaluated at bid price : 22.54 Bid-YTW : 7.63 % |
| GWO.PR.N | FixedReset Ins Non | -1.75 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 11.80 Evaluated at bid price : 11.80 Bid-YTW : 8.93 % |
| GWO.PR.M | Insurance Straight | -1.62 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 22.17 Evaluated at bid price : 22.45 Bid-YTW : 6.57 % |
| IFC.PR.K | Perpetual-Discount | -1.58 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 21.15 Evaluated at bid price : 21.15 Bid-YTW : 6.32 % |
| NA.PR.W | FixedReset Disc | -1.52 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 16.25 Evaluated at bid price : 16.25 Bid-YTW : 8.51 % |
| FTS.PR.M | FixedReset Disc | -1.51 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 16.35 Evaluated at bid price : 16.35 Bid-YTW : 8.80 % |
| GWO.PR.P | Insurance Straight | -1.50 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 21.08 Evaluated at bid price : 21.08 Bid-YTW : 6.53 % |
| TD.PF.M | FixedReset Disc | -1.49 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 22.67 Evaluated at bid price : 23.15 Bid-YTW : 7.46 % |
| BIP.PR.F | FixedReset Disc | -1.48 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 18.65 Evaluated at bid price : 18.65 Bid-YTW : 8.63 % |
| FTS.PR.G | FixedReset Disc | -1.45 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 17.00 Evaluated at bid price : 17.00 Bid-YTW : 8.27 % |
| MIC.PR.A | Perpetual-Discount | -1.44 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 20.50 Evaluated at bid price : 20.50 Bid-YTW : 6.71 % |
| RY.PR.O | Perpetual-Discount | -1.40 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 21.20 Evaluated at bid price : 21.20 Bid-YTW : 5.82 % |
| MFC.PR.C | Insurance Straight | -1.36 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 18.10 Evaluated at bid price : 18.10 Bid-YTW : 6.23 % |
| BMO.PR.Y | FixedReset Disc | -1.33 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 17.00 Evaluated at bid price : 17.00 Bid-YTW : 8.38 % |
| RY.PR.J | FixedReset Disc | -1.32 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 17.26 Evaluated at bid price : 17.26 Bid-YTW : 8.41 % |
| CM.PR.Y | FixedReset Disc | -1.29 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 22.48 Evaluated at bid price : 22.95 Bid-YTW : 7.59 % |
| MFC.PR.B | Insurance Straight | -1.17 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 18.53 Evaluated at bid price : 18.53 Bid-YTW : 6.29 % |
| GWO.PR.L | Insurance Straight | -1.17 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 21.75 Evaluated at bid price : 22.00 Bid-YTW : 6.53 % |
| MFC.PR.F | FixedReset Ins Non | -1.17 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 11.86 Evaluated at bid price : 11.86 Bid-YTW : 9.05 % |
| CU.PR.J | Perpetual-Discount | -1.16 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 18.78 Evaluated at bid price : 18.78 Bid-YTW : 6.36 % |
| PWF.PR.T | FixedReset Disc | -1.16 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 17.10 Evaluated at bid price : 17.10 Bid-YTW : 8.49 % |
| POW.PR.B | Perpetual-Discount | -1.13 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 21.01 Evaluated at bid price : 21.01 Bid-YTW : 6.47 % |
| PWF.PR.O | Perpetual-Discount | -1.10 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 22.22 Evaluated at bid price : 22.50 Bid-YTW : 6.52 % |
| GWO.PR.I | Insurance Straight | -1.10 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 18.00 Evaluated at bid price : 18.00 Bid-YTW : 6.37 % |
| PVS.PR.G | SplitShare | -1.05 % | YTW SCENARIO Maturity Type : Option Certainty Maturity Date : 2026-02-28 Maturity Price : 25.00 Evaluated at bid price : 23.60 Bid-YTW : 7.13 % |
| FTS.PR.F | Perpetual-Discount | -1.00 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 19.80 Evaluated at bid price : 19.80 Bid-YTW : 6.22 % |
| CU.PR.I | FixedReset Disc | 1.01 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 22.50 Evaluated at bid price : 23.00 Bid-YTW : 7.30 % |
| GWO.PR.T | Insurance Straight | 1.03 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 20.53 Evaluated at bid price : 20.53 Bid-YTW : 6.39 % |
| PVS.PR.J | SplitShare | 1.61 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2028-02-29 Maturity Price : 25.00 Evaluated at bid price : 22.10 Bid-YTW : 7.32 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| SLF.PR.E | Insurance Straight | 58,800 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 19.11 Evaluated at bid price : 19.11 Bid-YTW : 5.99 % |
| MIC.PR.A | Perpetual-Discount | 58,555 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 20.50 Evaluated at bid price : 20.50 Bid-YTW : 6.71 % |
| BN.PF.H | FixedReset Disc | 33,653 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 20.76 Evaluated at bid price : 20.76 Bid-YTW : 8.73 % |
| RY.PR.Z | FixedReset Disc | 32,000 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 16.55 Evaluated at bid price : 16.55 Bid-YTW : 8.44 % |
| GWO.PR.T | Insurance Straight | 23,340 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 20.53 Evaluated at bid price : 20.53 Bid-YTW : 6.39 % |
| TRP.PR.D | FixedReset Disc | 21,365 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-05-24 Maturity Price : 14.76 Evaluated at bid price : 14.76 Bid-YTW : 9.82 % |
| There were 12 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| PWF.PR.H | Perpetual-Discount | Quote: 22.05 – 23.05 Spot Rate : 1.0000 Average : 0.6232 YTW SCENARIO |
| MFC.PR.B | Insurance Straight | Quote: 18.53 – 19.65 Spot Rate : 1.1200 Average : 0.7542 YTW SCENARIO |
| MFC.PR.I | FixedReset Ins Non | Quote: 21.23 – 22.14 Spot Rate : 0.9100 Average : 0.5739 YTW SCENARIO |
| TRP.PR.A | FixedReset Disc | Quote: 12.50 – 13.21 Spot Rate : 0.7100 Average : 0.4462 YTW SCENARIO |
| BIP.PR.B | FixedReset Disc | Quote: 21.52 – 22.42 Spot Rate : 0.9000 Average : 0.6396 YTW SCENARIO |
| BN.PF.A | FixedReset Disc | Quote: 17.78 – 18.95 Spot Rate : 1.1700 Average : 0.9372 YTW SCENARIO |
We are back to the 2022 dynamics, albeit at much higher yields.
Fixed/floaters expect rates to fall dramatically.
Perpetual holders expect rates to rise enormously.
Consequently, both sell.
In the lala land, everybody is rejoicing on the new era of computing that has been around for decades.
In inflationary news, Costco has a blanket 20% off for pretty much anything on their site, if you spend $2500.
This is a world in no one has any clue. Navigation on first principles and sound investing concepts will succeed.
Brutal day indeed.
Nowhere to hide… it’s red everywhere on the pref market and many issues (mainly rate-reset) are near or at new all-time lows.
If feels like no matter how hard you think about what is the best way to invest during these turbulent times, the market tells you are bad and also wrong 🙁
I am quite optimistic we will be in a great shape in a couple of years but it is a challenging market these days.
“This is a world in no one has any clue. Navigation on first principles and sound investing concepts will succeed.”
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