11 Responses to “June 6, 2024”

1. Le_bib says:

   June 7, 2024 at 10:22 am

   What does the « change » column refers to?

   e.g. what is -10.51% for IFC.PR.G and what is +29.69% for NA.PR.W ?

2. jiHymas says:

   June 7, 2024 at 11:48 am

   What does the « change » column refers to?

   Change in the TSE reported bid price from the previous day’s bid price.

   Think some of the number are a little … odd? So do I!

3. Le_bib says:

   June 7, 2024 at 12:14 pm

   Oh it’s the last bid price!

   Hmmm…

4. fsabbagh says:

   June 7, 2024 at 2:56 pm

   Another bad day for the preferreds and another day of me overreacting 🙂 I am holding back on a few buys till things stabilize (if ever).

5. niagara says:

   June 7, 2024 at 3:03 pm

   fsabbagh, but it all makes sense in prefland. Earlier this week, BoC cuts rates, bond yields fall, prefs prices fall. Today, strong non-farm payrolls, strong wage growth both in the US and here, bond yields rise, so pref prices fall. See? Quite logical in prefland.

   And you thought that investing in prefs would be boring….

6. Nestor says:

   June 8, 2024 at 7:04 am

   ” I am holding back on a few buys till things stabilize (if ever). ”

   yes. things are very unstable last few years. run for the hills.

   MAPF Performance as of May 31

   One Month +3.69%
   Three Months +10.98%
   One Year +37.82%
   Two Years (annualized) +6.10%
   Three Years (annualized) +4.54%
   Four Years (annualized) +18.51%

7. fsabbagh says:

   June 8, 2024 at 12:16 pm

   The last couple of years, rates were rising. We all did very well. The opposite is true today. BOC made it clear that we can expect more rate cuts. Before I invest more $$$, I wanna see what’s gonna happen in July. Yes I’ll miss out on some dividends, so be it.

   https://ca.finance.yahoo.com/news/bank-of-canada-first-to-cut-rates-in-g7-economist-bets-are-on-another-in-july-200057740.html

8. Yomgui says:

   June 8, 2024 at 7:44 pm

   I may sound ignorant but I don’t see how rate cuts are going to impact all that much most of the pref market.

   Correct me if I’m wrong but when it comes to perpetuals or rate-reset (at least for issues based on the 5yr GOC bond yield) and considering how the rate curve looks right now (inverted), the BoC can cut from 4.75% to 2.75% over time and I would not be surprised to only see a very muted impact on the mid and long end of the yield curve resulting in a neutral situation for pref holders.
   That would be a simple normalization of the situation.

   Lowering rates can have adverse consequences like igniting a new bout of inflation but that is the only obvious risk I see.

   Actually, a bigger danger for preferreds in my opinion would have been the BoC holding steady (higher for much longer) because it would have increased the risk of a bear steepener if we started to assume that short term rates at or near 5% was the new normal.
   In this situation, going back to the lows of october 2023 and even much lower would have been a given in my opinion.

   Now I agree with a comment made by James, not impossible that a few people seeing the first rate cut in 4 years began to assume we would be going back to sub 1% in no time hence hurting many prefs.

   Anyway, I hope it makes sense ah ah.

9. Nestor says:

   June 9, 2024 at 7:00 am

   ” BOC made it clear that we can expect more rate cuts.”

   so….. ??

   own perpetuals then if you’re scared of rate cuts

10. stusclues says:

    June 9, 2024 at 10:37 am

    “The last couple of years, rates were rising. We all did very well. ”

    Not the strongest power of observation. FRs got killed during the run-up, only turning around last October for a fantastic run when rates looked to have peaked and folks starting anticipating cuts. Now that the cuts are starting, it seems to be a bit “buy the rumour, sell the news” type of situation.

    FR pricing has been driven by spreads demanded in the market. These spreads have been falling since October but are still very elevated by historical standards. Unless “this time is different”, which is one of Mark Carney’s three big lies of finance, spreads will resume their descent and FR pricing will continue to improve.

11. fsabbagh says:

    June 9, 2024 at 10:58 am

    Thanks guys for putting me straight 😉 On a serious note, I appreciate your feedback. You all seem more knowledgeable than I am in this field. That’s why I count on James to guide me with his newsletter.

    Still have quite a bit of cash to deploy. Will slowly ease into more purchases.

    All the best!