Canadian inflation came in low:
The Consumer Price Index rose 2.7 per cent in June on an annual basis, down from 2.9 per cent in May, Statistics Canada said Tuesday in a report. Financial analysts were expecting the inflation rate to ease to 2.8 per cent.
This is the sixth consecutive month that inflation has fallen within the Bank of Canada’s target range of 1 per cent to 3 per cent. Moreover, it’s the fifth out of six months this year that headline inflation has proven soft, relative to expectations on Bay Street.
On a month-to-month basis, consumer prices fell 0.1 per cent in June, without adjustments for seasonality.
There were several contributors to the weaker reading. For example, gasoline prices fell 3.1 per cent in June from May, while prices for travel tours tumbled by 11.1 per cent.
… this had an immediate effect on the money market:
Pre-announcement
Post-announcement
But the IMF warns us not to expect too much:
The International Monetary Fund has warned that stubborn inflation could keep interest rates higher for longer than expected, increasing fiscal and financial risks around the world.
Persistently high prices for services — which include haircuts, hotels and restaurants — as well as escalating trade tensions are propping up inflation and raising the prospect that interest rates will stay high for a while yet, the IMF cautioned Tuesday in its latest World Economic Outlook.
The warning highlights that the global economy is not yet in the clear when it comes to inflation, which explains the caution on the part of central banks in cutting interest rates. High borrowing costs, in turn, are prolonging the squeeze on household and business finances.
…
The agency blamed sticky services price inflation for “holding up progress” on reducing overall inflation. “Risks of persistent inflation in the services sector are tied to both wage- and price-setting, given that labor accounts for a high share of the costs in that sector,” it noted.“The escalation of trade tensions could further raise near-term risks to inflation by increasing the cost of imported goods.”
So: when in doubt – shop!
Wall Street is cheering after fresh data showed American consumers aren’t tapping out quite yet, despite a disappointing few months for retailers.
US retail spending has been mostly flat since the beginning of the year, holding steady in June, the Commerce Department reported Tuesday. Consumer spending is American’s main economic engine, powering two-thirds of the US economy. Retail sales, which capture spending on goods and food services, make up a big chunk of overall spending.
June’s reading was better than the outright decline economists projected in a FactSet poll — a shift from prior months when retail sales consistently came in worse than expected. The figures are adjusted for seasonal swings but not inflation.
US consumers’ surprising show of resilience helped send stocks higher on Tuesday, with the Dow reaching a new record.
Sales at gas stations declined the most last month, dropping 3% from May. Spending at car dealerships and on automotive parts also fell markedly in June, reflecting the cyberattack on CDK Global, a software provider for dealerships. Excluding spending at gas stations and on cars, sales were up a solid 0.8% in June.
Meanwhile, online sales were up a healthy 1.9% in June. The strength from that category could persist in July due to Amazon’s annual deal event known as Prime Day. Sales at home improvement stores were also robust last month, rising 1.4%
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
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| 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 | 0.3072 % | 2,179.9 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.3072 % | 4,181.0 |
| Floater | 10.64 % | 10.81 % | 87,574 | 8.93 | 2 | 0.3072 % | 2,409.6 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.2818 % | 3,497.0 |
| SplitShare | 4.78 % | 6.72 % | 28,785 | 1.23 | 6 | 0.2818 % | 4,176.2 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.2818 % | 3,258.4 |
| Perpetual-Premium | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0917 % | 2,718.8 |
| Perpetual-Discount | 6.33 % | 6.47 % | 56,115 | 13.27 | 28 | 0.0917 % | 2,964.7 |
| FixedReset Disc | 5.14 % | 7.06 % | 112,654 | 12.48 | 49 | 0.0928 % | 2,631.9 |
| Insurance Straight | 6.10 % | 6.37 % | 61,022 | 13.39 | 21 | 0.3216 % | 2,926.6 |
| FloatingReset | 9.19 % | 8.95 % | 30,968 | 10.43 | 4 | -0.6122 % | 2,786.4 |
| FixedReset Prem | 5.83 % | 6.20 % | 258,391 | 3.94 | 8 | 0.0148 % | 2,534.2 |
| FixedReset Bank Non | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0928 % | 2,690.4 |
| FixedReset Ins Non | 5.24 % | 6.62 % | 94,319 | 13.12 | 14 | 0.0448 % | 2,804.9 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| CU.PR.C | FixedReset Disc | -6.54 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-07-16 Maturity Price : 19.44 Evaluated at bid price : 19.44 Bid-YTW : 7.44 % |
| BN.PF.F | FixedReset Disc | -3.34 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-07-16 Maturity Price : 19.70 Evaluated at bid price : 19.70 Bid-YTW : 8.00 % |
| RY.PR.S | FixedReset Disc | -1.80 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-07-16 Maturity Price : 23.01 Evaluated at bid price : 24.50 Bid-YTW : 5.97 % |
| GWO.PR.I | Insurance Straight | -1.77 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-07-16 Maturity Price : 17.78 Evaluated at bid price : 17.78 Bid-YTW : 6.40 % |
| FFH.PR.J | FloatingReset | -1.26 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-07-16 Maturity Price : 19.55 Evaluated at bid price : 19.55 Bid-YTW : 9.77 % |
| BN.PF.C | Perpetual-Discount | -1.09 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-07-16 Maturity Price : 18.15 Evaluated at bid price : 18.15 Bid-YTW : 6.76 % |
| GWO.PR.H | Insurance Straight | 1.15 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-07-16 Maturity Price : 19.30 Evaluated at bid price : 19.30 Bid-YTW : 6.35 % |
| POW.PR.A | Perpetual-Discount | 1.15 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-07-16 Maturity Price : 21.65 Evaluated at bid price : 21.90 Bid-YTW : 6.43 % |
| BN.PR.X | FixedReset Disc | 1.18 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-07-16 Maturity Price : 16.33 Evaluated at bid price : 16.33 Bid-YTW : 7.87 % |
| BN.PR.T | FixedReset Disc | 1.28 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-07-16 Maturity Price : 16.61 Evaluated at bid price : 16.61 Bid-YTW : 8.11 % |
| GWO.PR.P | Insurance Straight | 1.29 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-07-16 Maturity Price : 21.18 Evaluated at bid price : 21.18 Bid-YTW : 6.45 % |
| SLF.PR.C | Insurance Straight | 1.32 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-07-16 Maturity Price : 19.20 Evaluated at bid price : 19.20 Bid-YTW : 5.85 % |
| SLF.PR.D | Insurance Straight | 1.32 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-07-16 Maturity Price : 19.16 Evaluated at bid price : 19.16 Bid-YTW : 5.87 % |
| PVS.PR.J | SplitShare | 1.93 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2028-02-29 Maturity Price : 25.00 Evaluated at bid price : 23.75 Bid-YTW : 6.14 % |
| BIP.PR.E | FixedReset Disc | 7.01 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-07-16 Maturity Price : 22.11 Evaluated at bid price : 22.58 Bid-YTW : 7.23 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| CM.PR.O | FixedReset Disc | 175,200 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-07-16 Maturity Price : 23.96 Evaluated at bid price : 24.94 Bid-YTW : 5.72 % |
| TD.PF.C | FixedReset Disc | 106,924 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-07-16 Maturity Price : 23.31 Evaluated at bid price : 24.05 Bid-YTW : 5.81 % |
| TD.PF.M | FixedReset Prem | 101,200 | YTW SCENARIO Maturity Type : Call Maturity Date : 2024-08-30 Maturity Price : 25.00 Evaluated at bid price : 24.94 Bid-YTW : 6.69 % |
| GWO.PR.P | Insurance Straight | 76,260 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-07-16 Maturity Price : 21.18 Evaluated at bid price : 21.18 Bid-YTW : 6.45 % |
| CM.PR.S | FixedReset Disc | 75,600 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-07-16 Maturity Price : 24.19 Evaluated at bid price : 24.19 Bid-YTW : 6.09 % |
| SLF.PR.G | FixedReset Ins Non | 75,014 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-07-16 Maturity Price : 17.12 Evaluated at bid price : 17.12 Bid-YTW : 6.79 % |
| There were 17 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| IFC.PR.E | Insurance Straight | Quote: 21.35 – 23.22 Spot Rate : 1.8700 Average : 1.1545 YTW SCENARIO |
| CU.PR.C | FixedReset Disc | Quote: 19.44 – 21.05 Spot Rate : 1.6100 Average : 1.0306 YTW SCENARIO |
| GWO.PR.G | Insurance Straight | Quote: 20.46 – 21.41 Spot Rate : 0.9500 Average : 0.5774 YTW SCENARIO |
| BN.PF.F | FixedReset Disc | Quote: 19.70 – 20.55 Spot Rate : 0.8500 Average : 0.6016 YTW SCENARIO |
| PVS.PR.J | SplitShare | Quote: 23.75 – 24.90 Spot Rate : 1.1500 Average : 0.9098 YTW SCENARIO |
| GWO.PR.I | Insurance Straight | Quote: 17.78 – 18.50 Spot Rate : 0.7200 Average : 0.5530 YTW SCENARIO |