The FOMC kept things steady today:
Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated.The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook has diminished but remains elevated. The Committee is attentive to the risks to both sides of its dual mandate.
In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Adriana D. Kugler; Alberto G. Musalem; Jeffrey R. Schmid; and Christopher J. Waller.
The dotplot (page 4 of the Summary of Economic Projections indicated an overall expectation of the policy rate being about maybe 3.00% in the (post 2027) “longer term”). PerpetualDiscounts now yield 5.97%, equivalent to 7.76% interest at the standard equivalency factor of 1.3x. Long corporates yielded 4.92% on 2025-6-18. Therefore, the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has widened slightly (and perhaps spuriously) to 285bp from the 280bp calculated but not reported on 2025-6-11.
I’ll post more about my hiatus eventually. For now, I’m too busy trying to replace things!
| 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 | 0.3672 % | 2,267.6 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.3672 % | 4,414.1 |
| Floater | 7.04 % | 7.09 % | 60,389 | 12.50 | 2 | 0.3672 % | 2,543.9 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.2382 % | 3,651.1 |
| SplitShare | 4.79 % | 4.40 % | 67,967 | 2.53 | 8 | 0.2382 % | 4,360.2 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.2382 % | 3,402.0 |
| Perpetual-Premium | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1721 % | 2,944.9 |
| Perpetual-Discount | 5.84 % | 5.97 % | 44,156 | 13.86 | 33 | -0.1721 % | 3,211.3 |
| FixedReset Disc | 5.62 % | 6.29 % | 114,695 | 12.92 | 46 | -0.0453 % | 2,890.6 |
| Insurance Straight | 5.79 % | 5.87 % | 51,848 | 14.14 | 20 | -0.0232 % | 3,127.1 |
| FloatingReset | 5.65 % | 5.71 % | 41,119 | 14.36 | 3 | 0.1063 % | 3,654.0 |
| FixedReset Prem | 6.08 % | 5.10 % | 115,613 | 3.29 | 12 | 0.1065 % | 2,610.0 |
| FixedReset Bank Non | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0453 % | 2,954.8 |
| FixedReset Ins Non | 5.15 % | 5.82 % | 68,954 | 14.12 | 14 | 0.1890 % | 2,993.1 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| CU.PR.F | Perpetual-Discount | -3.81 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 18.96 Evaluated at bid price : 18.96 Bid-YTW : 6.00 % |
| CU.PR.G | Perpetual-Discount | -2.55 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 19.10 Evaluated at bid price : 19.10 Bid-YTW : 5.95 % |
| IFC.PR.F | Insurance Straight | -2.29 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 22.13 Evaluated at bid price : 22.57 Bid-YTW : 5.87 % |
| GWO.PR.L | Insurance Straight | -2.09 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 23.14 Evaluated at bid price : 23.40 Bid-YTW : 6.05 % |
| MFC.PR.K | FixedReset Ins Non | -1.83 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 23.01 Evaluated at bid price : 24.15 Bid-YTW : 5.59 % |
| BIP.PR.F | FixedReset Disc | -1.69 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 23.07 Evaluated at bid price : 24.38 Bid-YTW : 6.14 % |
| PWF.PR.Z | Perpetual-Discount | -1.60 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 21.50 Evaluated at bid price : 21.50 Bid-YTW : 6.09 % |
| IFC.PR.I | Insurance Straight | -1.50 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 22.60 Evaluated at bid price : 23.00 Bid-YTW : 5.88 % |
| BIP.PR.E | FixedReset Disc | -1.29 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 23.24 Evaluated at bid price : 24.53 Bid-YTW : 6.18 % |
| CU.PR.E | Perpetual-Discount | -1.28 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 20.75 Evaluated at bid price : 20.75 Bid-YTW : 5.97 % |
| GWO.PR.I | Insurance Straight | 1.19 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 19.48 Evaluated at bid price : 19.48 Bid-YTW : 5.80 % |
| CU.PR.D | Perpetual-Discount | 1.38 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 21.35 Evaluated at bid price : 21.35 Bid-YTW : 5.80 % |
| MFC.PR.B | Insurance Straight | 1.43 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 20.54 Evaluated at bid price : 20.54 Bid-YTW : 5.70 % |
| IFC.PR.E | Insurance Straight | 1.44 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 22.96 Evaluated at bid price : 23.25 Bid-YTW : 5.60 % |
| SLF.PR.H | FixedReset Ins Non | 1.59 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 21.15 Evaluated at bid price : 21.15 Bid-YTW : 5.89 % |
| GWO.PR.H | Insurance Straight | 1.62 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 20.73 Evaluated at bid price : 20.73 Bid-YTW : 5.88 % |
| MFC.PR.M | FixedReset Ins Non | 1.94 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 22.38 Evaluated at bid price : 23.14 Bid-YTW : 5.82 % |
| BN.PR.R | FixedReset Disc | 2.02 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 18.20 Evaluated at bid price : 18.20 Bid-YTW : 7.07 % |
| CU.PR.J | Perpetual-Discount | 2.54 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 20.56 Evaluated at bid price : 20.56 Bid-YTW : 5.84 % |
| SLF.PR.G | FixedReset Ins Non | 2.56 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 18.05 Evaluated at bid price : 18.05 Bid-YTW : 6.10 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded | Notes |
| MFC.PR.Q | FixedReset Ins Non | 40,400 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 23.26 Evaluated at bid price : 24.68 Bid-YTW : 5.64 % |
| IFC.PR.A | FixedReset Ins Non | 40,205 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 21.38 Evaluated at bid price : 21.38 Bid-YTW : 5.54 % |
| PWF.PR.K | Perpetual-Discount | 35,363 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 21.00 Evaluated at bid price : 21.00 Bid-YTW : 5.99 % |
| MFC.PR.F | FixedReset Ins Non | 18,472 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 17.50 Evaluated at bid price : 17.50 Bid-YTW : 6.10 % |
| FTS.PR.K | FixedReset Disc | 13,800 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 21.59 Evaluated at bid price : 21.85 Bid-YTW : 5.91 % |
| PWF.PF.A | Perpetual-Discount | 13,800 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 19.27 Evaluated at bid price : 19.27 Bid-YTW : 5.94 % |
| There were 5 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| See TMX DataLinx: ‘Last’ != ‘Close’ and the posts linked therein for an idea of why these quotes are so horrible. | ||
| Issue | Index | Quote Data and Yield Notes |
| CU.PR.E | Perpetual-Discount | Quote: 20.75 – 23.54 Spot Rate : 2.7900 Average : 1.6380 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 20.75 Evaluated at bid price : 20.75 Bid-YTW : 5.97 % |
| CU.PR.F | Perpetual-Discount | Quote: 18.96 – 21.75 Spot Rate : 2.7900 Average : 1.7067 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 18.96 Evaluated at bid price : 18.96 Bid-YTW : 6.00 % |
| GWO.PR.L | Insurance Straight | Quote: 23.40 – 25.00 Spot Rate : 1.6000 Average : 0.9310 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 23.14 Evaluated at bid price : 23.40 Bid-YTW : 6.05 % |
| IFC.PR.F | Insurance Straight | Quote: 22.57 – 23.87 Spot Rate : 1.3000 Average : 0.8673 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 22.13 Evaluated at bid price : 22.57 Bid-YTW : 5.87 % |
| GWO.PR.Y | Insurance Straight | Quote: 19.30 – 21.00 Spot Rate : 1.7000 Average : 1.3066 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 19.30 Evaluated at bid price : 19.30 Bid-YTW : 5.86 % |
| CU.PR.G | Perpetual-Discount | Quote: 19.10 – 20.20 Spot Rate : 1.1000 Average : 0.7137 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-06-18 Maturity Price : 19.10 Evaluated at bid price : 19.10 Bid-YTW : 5.95 % |
[…] PerpetualDiscounts now yield 5.93%, equivalent to 7.71% interest at the standard conversion factor of 1.3x. Long corporates now yield 4.90%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) is now 280bp, a slight (and perhaps spurious) narrowing from the 285bp reported June 18 […]