The Trump news keeps getting more and more bizarre and self-destructive:
Just two weeks after President Donald Trump sent a handwritten letter to Powell demanding lower interest rates, Russell Vought, Trump’s director of the Office of Management and Budget (OMB), accused Powell of breaking the law by failing to comply with government oversight regulations and lying to Congress about details of an approximately $2.5 billion planned renovation of the Fed’s headquarters.
“The President is extremely troubled by your management of the Federal Reserve System,” Vought wrote in a letter he posted to social media Thursday. “Instead of attempting to right the Fed’s fiscal ship, you have plowed ahead with an ostentatious overhaul of your Washington D.C. headquarters.”
…
The latest criticism about the rising costs of the Fed’s headquarters may signal the administration is laying the groundwork to justify firing Powell, said Ed Mills, a policy analyst at Raymond James.“The Supreme Court has made it very clear in their rulings that they would not support the president firing Powell,” Mills said. “So they can either find a reason to fire him for cause, or you create enough of a negative environment that Powell says, ‘it’s no longer worth it, I’m out.’”
If they actually do follow through with firing Powell, look for market yields to spike 100bp. Mind you, I suspect that this is all bluster that will come to nothing – it’s just to show the base what a he-man Trump is. Or it could all be intended as a distraction from the gutting of the civil service and the ongoing pogrom against migrants. Who knows?
| 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 | -0.1575 % | 2,337.6 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1575 % | 4,550.5 |
| Floater | 6.83 % | 6.89 % | 52,193 | 12.70 | 2 | -0.1575 % | 2,622.5 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.2255 % | 3,672.0 |
| SplitShare | 4.77 % | 4.43 % | 60,205 | 0.62 | 7 | 0.2255 % | 4,385.1 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.2255 % | 3,421.4 |
| Perpetual-Premium | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.5110 % | 2,982.1 |
| Perpetual-Discount | 5.77 % | 5.88 % | 46,557 | 14.09 | 32 | -0.5110 % | 3,251.8 |
| FixedReset Disc | 5.66 % | 6.19 % | 118,150 | 13.24 | 40 | 0.0646 % | 2,970.5 |
| Insurance Straight | 5.70 % | 5.75 % | 50,814 | 14.30 | 19 | -0.0626 % | 3,177.2 |
| FloatingReset | 5.61 % | 5.37 % | 42,211 | 14.86 | 2 | -1.0981 % | 3,629.7 |
| FixedReset Prem | 5.75 % | 5.04 % | 123,760 | 2.63 | 16 | -0.2036 % | 2,619.3 |
| FixedReset Bank Non | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0646 % | 3,036.4 |
| FixedReset Ins Non | 5.27 % | 5.62 % | 65,977 | 14.15 | 14 | -1.1905 % | 3,033.8 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| MFC.PR.M | FixedReset Ins Non | -13.85 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-07-10 Maturity Price : 21.15 Evaluated at bid price : 21.15 Bid-YTW : 6.44 % |
| GWO.PR.M | Insurance Straight | -7.47 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-07-10 Maturity Price : 22.66 Evaluated at bid price : 22.90 Bid-YTW : 6.38 % |
| MFC.PR.F | FixedReset Ins Non | -3.36 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-07-10 Maturity Price : 17.55 Evaluated at bid price : 17.55 Bid-YTW : 6.09 % |
| CU.PR.J | Perpetual-Discount | -3.14 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-07-10 Maturity Price : 20.05 Evaluated at bid price : 20.05 Bid-YTW : 6.01 % |
| SLF.PR.J | FloatingReset | -2.63 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-07-10 Maturity Price : 17.00 Evaluated at bid price : 17.00 Bid-YTW : 6.04 % |
| CU.PR.D | Perpetual-Discount | -2.49 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-07-10 Maturity Price : 20.72 Evaluated at bid price : 20.72 Bid-YTW : 6.00 % |
| PWF.PR.P | FixedReset Disc | -2.29 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-07-10 Maturity Price : 17.61 Evaluated at bid price : 17.61 Bid-YTW : 6.36 % |
| PWF.PR.K | Perpetual-Discount | -1.86 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-07-10 Maturity Price : 20.84 Evaluated at bid price : 20.84 Bid-YTW : 5.96 % |
| GWO.PR.R | Insurance Straight | -1.53 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-07-10 Maturity Price : 20.53 Evaluated at bid price : 20.53 Bid-YTW : 5.90 % |
| BN.PR.N | Perpetual-Discount | -1.35 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-07-10 Maturity Price : 19.73 Evaluated at bid price : 19.73 Bid-YTW : 6.08 % |
| PWF.PR.Z | Perpetual-Discount | 1.00 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-07-10 Maturity Price : 21.67 Evaluated at bid price : 22.00 Bid-YTW : 5.85 % |
| PWF.PR.E | Perpetual-Discount | 1.03 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-07-10 Maturity Price : 23.20 Evaluated at bid price : 23.50 Bid-YTW : 5.85 % |
| BN.PR.X | FixedReset Disc | 1.17 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-07-10 Maturity Price : 19.09 Evaluated at bid price : 19.09 Bid-YTW : 6.27 % |
| BN.PF.B | FixedReset Disc | 1.32 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-07-10 Maturity Price : 22.36 Evaluated at bid price : 23.00 Bid-YTW : 6.25 % |
| BN.PR.M | Perpetual-Discount | 1.37 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-07-10 Maturity Price : 20.03 Evaluated at bid price : 20.03 Bid-YTW : 5.98 % |
| GWO.PR.P | Insurance Straight | 1.46 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-07-10 Maturity Price : 23.25 Evaluated at bid price : 23.55 Bid-YTW : 5.77 % |
| PWF.PR.R | Perpetual-Discount | 1.69 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-07-10 Maturity Price : 23.03 Evaluated at bid price : 23.30 Bid-YTW : 5.91 % |
| PVS.PR.L | SplitShare | 2.05 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2025-08-09 Maturity Price : 26.00 Evaluated at bid price : 26.38 Bid-YTW : -6.50 % |
| ENB.PR.H | FixedReset Disc | 2.59 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-07-10 Maturity Price : 21.41 Evaluated at bid price : 21.75 Bid-YTW : 6.17 % |
| SLF.PR.D | Insurance Straight | 2.75 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-07-10 Maturity Price : 20.55 Evaluated at bid price : 20.55 Bid-YTW : 5.46 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| BN.PF.A | FixedReset Disc | 147,402 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-07-10 Maturity Price : 23.24 Evaluated at bid price : 24.72 Bid-YTW : 6.10 % |
| TD.PF.D | FixedReset Prem | 142,500 | YTW SCENARIO Maturity Type : Call Maturity Date : 2025-08-30 Maturity Price : 25.00 Evaluated at bid price : 24.95 Bid-YTW : 4.87 % |
| GWO.PR.N | FixedReset Ins Non | 107,300 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-07-10 Maturity Price : 17.58 Evaluated at bid price : 17.58 Bid-YTW : 5.99 % |
| ENB.PF.G | FixedReset Disc | 53,500 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-07-10 Maturity Price : 20.90 Evaluated at bid price : 20.90 Bid-YTW : 6.80 % |
| ENB.PF.C | FixedReset Disc | 38,900 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-07-10 Maturity Price : 20.77 Evaluated at bid price : 20.77 Bid-YTW : 6.81 % |
| BMO.PR.Y | FixedReset Disc | 27,400 | YTW SCENARIO Maturity Type : Call Maturity Date : 2025-08-25 Maturity Price : 25.00 Evaluated at bid price : 25.10 Bid-YTW : 2.89 % |
| There were 13 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 |
| MFC.PR.M | FixedReset Ins Non | Quote: 21.15 – 24.70 Spot Rate : 3.5500 Average : 2.2789 YTW SCENARIO |
| GWO.PR.M | Insurance Straight | Quote: 22.90 – 24.80 Spot Rate : 1.9000 Average : 1.0520 YTW SCENARIO |
| BN.PR.T | FixedReset Disc | Quote: 19.55 – 21.00 Spot Rate : 1.4500 Average : 0.9248 YTW SCENARIO |
| BN.PF.D | Perpetual-Discount | Quote: 20.30 – 22.00 Spot Rate : 1.7000 Average : 1.3463 YTW SCENARIO |
| CU.PR.J | Perpetual-Discount | Quote: 20.05 – 21.10 Spot Rate : 1.0500 Average : 0.7880 YTW SCENARIO |
| MFC.PR.F | FixedReset Ins Non | Quote: 17.55 – 18.28 Spot Rate : 0.7300 Average : 0.4939 YTW SCENARIO |
James, could you pleases elaborate why you think if Powell is fired, it will lead to spike in rates?
The Fed will be perceived as non-independent; perhaps not explicitly, but with a chairman who owes his post more to ideology than to competence.
It won’t take long before the newspaper op-eds fill up with comparisons to the disaster in Turkey, what with Trump’s views on interest rates being so similar to Erdogan’s.
I don’t think any central bank is really independent, or ever were. It’s all a show. They used to keep it well managed, but Trump is just upsetting the apple cart on purpose. In any case, i would be careful holding too much government paper. They’re all broke and will print (wait, they don’t do that, right, they will create settlement balances out of thin air again, to buy up Carney’s deficits when nobody else will). Smoke and mirrors….
It is quite true that degrees of independence vary, with some central bank heads being less strong willed than others. Burns, for instance, is regarded by many as being Nixon’s puppet; I was, and remain, highly suspicious of Carney’s independence as Canada’s central bank governor.
But what’s the alternative? To the extent they do a good job, that’s a good job done for everybody – look at the history of mortgages – in civilized countries, mortgage terms greatly exceed the derisory five years offered in Canada. Naturally, there are many programmes and government policies that go into the viability of long-term mortgages, but there is a huge contribution from the central banks’ provision of liquidity and at least some stability in market interest rates coming from a well defined monetary policy.