There was slack Canadian economic news today:
Canada’s gross domestic product expanded at a faster-than-expected 0.2 per cent rate in July, but an advance estimate indicated that growth likely stalled in August, data showed on Friday, bolstering hopes for a supersized interest rate cut next month.
…
The economy grew in July despite the negative impact of wildfires on several industries, with growth driven by services-producing industries, primarily retail trade, public sectors and finance and insurance, Statistics Canada said.The expected economic weakness in August likely is due to a contraction in manufacturing, transportation and warehousing which would essentially offset growth in oil and gas extraction and the public sector, Statscan said.
The BoC forecast in July that the economy would grow 2.8 per cent in the third quarter, but data released since then have led economists to predict growth of about half that figure.
…
On Tuesday, BoC Governor Tiff Macklem said it was reasonable to expect more rate cuts given the progress made in cooling inflation and reiterated that the central bank wanted to see growth pick up to absorb economic slack.Economic growth in July was driven by increases in both services, which grew by 0.2 per cent, and goods industries, which rose by 0.1 per cent, Statscan said.
And markets reacted:
Today’s reading on gross domestic product hasn’t settled the debate in money markets and among economists as to whether the Bank of Canada will cut its trend-setting interest rate by 25 or 50 basis points next month.
But for markets, the data were enough to give slightly better odds to the larger of the two possibilities at the Oct. 23 policy meeting. Several economists are also suggesting a 50 basis point cut looms.
The U.S. also released inflation data simultaneously that showed easing price pressures in the world’s largest economy, boosting the chances of an outsized interest rate cut at the Federal Reserve’s November meeting. That’s also providing the Bank of Canada with the room to cut its policy rate further without heightened risks of weakening the Canadian currency.
…
Here’s how implied probabilities of future interest rate moves stand in swaps markets, according to data from LSEG moments after the 830 am ET data were released. The overnight rate now resides at 4.25%. While the bank moves in quarter point increments, credit market implied rates fluctuate more fluidly and are constantly changing. Columns to the right are percentage probabilities of future rate moves.
Pre-GDP Announcement
Post-GDP Announcement
| 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 | 0.1757 % | 2,174.2 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.1757 % | 4,170.1 |
| Floater | 9.90 % | 10.02 % | 53,088 | 9.57 | 2 | 0.1757 % | 2,403.2 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1325 % | 3,543.3 |
| SplitShare | 4.86 % | 5.53 % | 57,089 | 3.14 | 5 | -0.1325 % | 4,231.4 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1325 % | 3,301.5 |
| Perpetual-Premium | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.3845 % | 2,938.3 |
| Perpetual-Discount | 5.86 % | 5.95 % | 51,430 | 13.94 | 31 | 0.3845 % | 3,204.1 |
| FixedReset Disc | 5.50 % | 6.58 % | 113,769 | 12.96 | 58 | 0.5920 % | 2,657.8 |
| Insurance Straight | 5.72 % | 5.75 % | 63,914 | 14.28 | 20 | 0.3849 % | 3,162.8 |
| FloatingReset | 8.38 % | 8.51 % | 32,384 | 10.90 | 2 | 0.0262 % | 2,734.1 |
| FixedReset Prem | 6.44 % | 5.55 % | 225,857 | 13.53 | 7 | 0.0167 % | 2,571.0 |
| FixedReset Bank Non | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.5920 % | 2,716.8 |
| FixedReset Ins Non | 5.23 % | 5.91 % | 103,156 | 14.01 | 14 | 0.9745 % | 2,810.4 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| BMO.PR.W | FixedReset Disc | -1.90 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-09-27 Maturity Price : 22.67 Evaluated at bid price : 23.79 Bid-YTW : 5.21 % |
| SLF.PR.G | FixedReset Ins Non | -1.83 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-09-27 Maturity Price : 16.10 Evaluated at bid price : 16.10 Bid-YTW : 6.32 % |
| TD.PF.E | FixedReset Disc | -1.47 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-09-27 Maturity Price : 22.88 Evaluated at bid price : 23.40 Bid-YTW : 5.88 % |
| GWO.PR.N | FixedReset Ins Non | -1.10 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-09-27 Maturity Price : 14.44 Evaluated at bid price : 14.44 Bid-YTW : 6.71 % |
| GWO.PR.H | Insurance Straight | 1.14 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-09-27 Maturity Price : 21.21 Evaluated at bid price : 21.21 Bid-YTW : 5.75 % |
| FFH.PR.K | FixedReset Disc | 1.18 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-09-27 Maturity Price : 21.98 Evaluated at bid price : 22.25 Bid-YTW : 6.84 % |
| GWO.PR.G | Insurance Straight | 1.21 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-09-27 Maturity Price : 22.40 Evaluated at bid price : 22.66 Bid-YTW : 5.76 % |
| GWO.PR.P | Insurance Straight | 1.27 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-09-27 Maturity Price : 22.88 Evaluated at bid price : 23.15 Bid-YTW : 5.86 % |
| BIP.PR.E | FixedReset Disc | 1.27 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-09-27 Maturity Price : 22.84 Evaluated at bid price : 23.85 Bid-YTW : 6.25 % |
| MFC.PR.F | FixedReset Ins Non | 1.56 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-09-27 Maturity Price : 16.25 Evaluated at bid price : 16.25 Bid-YTW : 6.14 % |
| GWO.PR.T | Insurance Straight | 2.35 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-09-27 Maturity Price : 21.75 Evaluated at bid price : 21.75 Bid-YTW : 5.96 % |
| CU.PR.J | Perpetual-Discount | 2.47 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-09-27 Maturity Price : 20.29 Evaluated at bid price : 20.29 Bid-YTW : 5.93 % |
| ENB.PF.G | FixedReset Disc | 3.20 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-09-27 Maturity Price : 17.75 Evaluated at bid price : 17.75 Bid-YTW : 7.50 % |
| CU.PR.F | Perpetual-Discount | 3.74 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-09-27 Maturity Price : 19.40 Evaluated at bid price : 19.40 Bid-YTW : 5.87 % |
| CU.PR.G | Perpetual-Discount | 4.32 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-09-27 Maturity Price : 19.30 Evaluated at bid price : 19.30 Bid-YTW : 5.90 % |
| BN.PR.X | FixedReset Disc | 10.45 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-09-27 Maturity Price : 16.80 Evaluated at bid price : 16.80 Bid-YTW : 6.85 % |
| MFC.PR.M | FixedReset Ins Non | 17.42 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-09-27 Maturity Price : 21.10 Evaluated at bid price : 21.10 Bid-YTW : 6.09 % |
| BIP.PR.A | FixedReset Disc | 33.19 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-09-27 Maturity Price : 21.31 Evaluated at bid price : 21.31 Bid-YTW : 7.31 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| PVS.PR.L | SplitShare | 514,152 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-06-30 Maturity Price : 25.00 Evaluated at bid price : 25.04 Bid-YTW : 5.49 % |
| TD.PF.E | FixedReset Disc | 52,600 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-09-27 Maturity Price : 22.88 Evaluated at bid price : 23.40 Bid-YTW : 5.88 % |
| PVS.PR.I | SplitShare | 31,300 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-10-31 Maturity Price : 25.00 Evaluated at bid price : 24.66 Bid-YTW : 6.35 % |
| MFC.PR.F | FixedReset Ins Non | 20,750 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-09-27 Maturity Price : 16.25 Evaluated at bid price : 16.25 Bid-YTW : 6.14 % |
| TD.PF.J | FixedReset Prem | 16,100 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-09-27 Maturity Price : 23.28 Evaluated at bid price : 24.95 Bid-YTW : 5.55 % |
| CU.PR.F | Perpetual-Discount | 15,100 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2054-09-27 Maturity Price : 19.40 Evaluated at bid price : 19.40 Bid-YTW : 5.87 % |
| There were 4 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| ENB.PF.K | FixedReset Disc | Quote: 23.10 – 24.10 Spot Rate : 1.0000 Average : 0.5979 YTW SCENARIO |
| CCS.PR.C | Insurance Straight | Quote: 21.65 – 22.75 Spot Rate : 1.1000 Average : 0.8130 YTW SCENARIO |
| CU.PR.I | FixedReset Disc | Quote: 24.30 – 24.95 Spot Rate : 0.6500 Average : 0.4358 YTW SCENARIO |
| BN.PF.G | FixedReset Disc | Quote: 17.85 – 18.85 Spot Rate : 1.0000 Average : 0.7999 YTW SCENARIO |
| IFC.PR.F | Insurance Straight | Quote: 23.10 – 23.99 Spot Rate : 0.8900 Average : 0.6931 YTW SCENARIO |
| MFC.PR.K | FixedReset Ins Non | Quote: 24.18 – 24.74 Spot Rate : 0.5600 Average : 0.4348 YTW SCENARIO |