PrefBlog

TXPR closed at 503.42, down 0.56% on the day and setting a new 52-week low. Volume today was 1.61-million, above the median of the past 21 trading days.

CPD closed at 10.03, down 0.60% on the day and setting a new 52-week low. Volume was 116,440, second-highest of the past 21 trading days.

ZPR closed at 8.42, down 0.71% on the day. Volume was 141,000, near the median of the past 21 trading days.

Five-year Canada yields were up to 4.37%.

I don’t know what a pundit might call this. Risk-off? Flight to safety? Response to rising yields? The last makes the least sense, so I suppose that gets the vote.

U.S. and Canadian stocks ended sharply lower on Wednesday with Treasury yields rising again and investors assessing the latest batch of quarterly corporate results and forecasts.

Mounting tensions in the Middle East stoked risk aversion. Safe-haven gold hit its highest in more than two months while the Cboe Volatility index, Wall Street’s fear gauge, rose. Dividend-rich sectors of the TSX were particularly hard hit, with industrials, real estate, financials and telecom sectors all down by about 2%.

The yield on U.S. 10-year notes rose 4.9 basis points to 4.896% after earlier in the day hitting 4.928%, the highest for the benchmark Treasury since July 2007. The Canada 10-year was up 3.4 basis points at 4.108%, moving closer to a 16-year high it touched earlier this month at 4.292%.

Yields edged higher after data showing U.S. single-family homebuilding rebounded in September, stoking the view that the Federal Reserve will keep interest rates higher for longer.

PerpetualDiscounts now yield 7.20%, equivalent to 9.36% interest at the standard equivalency factor of 1.3x. Long corporates yielded 5.68% on 2023-10-13 and since then the closing price has changed from 13.98 to 13.76, a decrease of 157bp in price, with a Duration of 11.98 (BMO doesn’t specify whether this is Macaulay or Modified Duration; I will assume Modified) which implies an increase in yield of about 13bp since 10/13 to 5.81%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has narrowed slightly (and perhaps spuriously) to 355bp from the 360bp reported October 11.

This entry was posted on Wednesday, October 18th, 2023 at 8:41 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.