The Fed stood pat today:
The Federal Open Market Committee approved the following statement for release by a 10 – 2 vote:
The Committee decided to maintain the target range for the federal funds rate at 3-3/4 to 4 percent, in support of the Federal Reserve’s dual mandate. The Committee is continuing its policy of maintaining ample reserves in the banking system.
Economic activity is expanding at a strong pace. While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient. Productivity growth is strong, and capital investment is robust. Job gains have kept pace with the workforce, and the unemployment rate has changed little.
Inflation remains elevated. The accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee’s 2 percent goal. The Committee will deliver price stability.
Voting against the monetary policy action were Lisa D. Cook and Beth M. Hammack, who preferred to raise the target range for the federal funds rate by 1/4 percentage point at this meeting.
I am pleasantly surprised to learn that there are whispers about Social Security during the mid-terms in that southern place:
Republican senators rarely endorse raising taxes, especially from under the lights of a debate stage. But Senator Roger Marshall, the Kansas incumbent seeking re-election, said he supported the idea to strengthen Social Security.
“I would eliminate the cap altogether,” Mr. Marshall said in a debate last Wednesday, referring to the $184,500 income ceiling on payroll taxes, the dedicated tax that finances the social insurance program. That means higher earners would be subject to taxes on a larger share of their income. His Democratic opponent, Adam Hamilton, supported raising the cap — though he wasn’t yet sure by how much.
…
Many Senate candidates in battleground states have clung to expected party lines and broad pledges to protect the program. But a growing number of Republican candidates, including Mr. Marshall, have said they’re open to the idea of subjecting more earned income to Social Security taxes. They join sitting Republican lawmakers including Senator Bernie Moreno of Ohio and Representatives Tom Cole of Oklahoma and Lloyd Smucker of Pennsylvania.
…
Social Security is financed through workers’ payroll taxes, a dedicated tax of 6.2 percent of earnings paid by both employees and employers (for a total of 12.4 percent). It’s applied to the first $184,500 of earnings in 2026 — that’s known as the taxable maximum, which rises with average wages.
…
In a recent analysis of 41 Senate candidates in competitive races (there are 35 races total), 20 candidates have endorsed raising or eliminating the cap, according to Jon Schwabish, an economist who focuses on retirement and tax policy issues and the founder of PolicyViz, a data analysis firm.
…
Eliminating the payroll cap altogether — without providing any corresponding rise in benefits to individuals paying more in taxes — would close about 58 percent of the financing gap over the next 75 years, according to Social Security’s projections, though other estimates vary. (Providing higher benefits to people who pay more in tax wouldn’t go quite as far in narrowing the gap.)
…
Raising taxes is not the only way to bolster the program: benefit reductions, slowing the cost-of-living adjustments, raising the retirement age or collecting other taxes are other options, some of which were also mentioned in recent political ads, debates or on candidates’ websites.
| 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 | -0.0340 % | 2,766.0 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0340 % | 5,208.8 |
| Floater | 5.30 % | 5.36 % | 25,564 | 14.89 | 2 | -0.0340 % | 3,001.8 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.1361 % | 3,615.3 |
| SplitShare | 4.80 % | 5.35 % | 59,146 | 2.42 | 5 | 0.1361 % | 4,317.5 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.1361 % | 3,368.7 |
| Perpetual-Premium | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0097 % | 3,037.5 |
| Perpetual-Discount | 5.76 % | 5.83 % | 50,210 | 14.10 | 32 | 0.0097 % | 3,268.4 |
| FixedReset Disc | 5.71 % | 6.19 % | 84,057 | 13.31 | 25 | 0.0034 % | 3,361.0 |
| Insurance Straight | 5.71 % | 5.78 % | 65,421 | 14.22 | 19 | -0.5504 % | 3,153.9 |
| FloatingReset | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0034 % | 4,103.8 |
| FixedReset Prem | 6.04 % | 5.06 % | 75,151 | 1.92 | 24 | 0.0897 % | 2,612.9 |
| FixedReset Bank Non | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0034 % | 3,435.6 |
| FixedReset Ins Non | 5.65 % | 5.74 % | 46,903 | 13.95 | 13 | -0.4385 % | 3,226.4 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| GWO.PR.G | Insurance Straight | -7.24 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-10-28 Maturity Price : 21.15 Evaluated at bid price : 21.15 Bid-YTW : 6.23 % |
| IFC.PR.A | FixedReset Ins Non | -4.50 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-10-28 Maturity Price : 22.06 Evaluated at bid price : 22.70 Bid-YTW : 5.83 % |
| ENB.PF.C | FixedReset Disc | -3.73 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-10-28 Maturity Price : 22.40 Evaluated at bid price : 23.00 Bid-YTW : 6.67 % |
| POW.PR.B | Perpetual-Discount | -3.16 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-10-28 Maturity Price : 22.41 Evaluated at bid price : 22.67 Bid-YTW : 5.94 % |
| GWO.PR.P | Insurance Straight | -1.90 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-10-28 Maturity Price : 22.93 Evaluated at bid price : 23.20 Bid-YTW : 5.88 % |
| FTS.PR.J | Perpetual-Discount | -1.37 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-10-28 Maturity Price : 21.28 Evaluated at bid price : 21.55 Bid-YTW : 5.59 % |
| PWF.PR.L | Perpetual-Discount | -1.37 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-10-28 Maturity Price : 21.33 Evaluated at bid price : 21.60 Bid-YTW : 5.93 % |
| POW.PR.D | Perpetual-Discount | -1.08 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-10-28 Maturity Price : 21.75 Evaluated at bid price : 22.00 Bid-YTW : 5.72 % |
| IFC.PR.F | Insurance Straight | -1.06 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-10-28 Maturity Price : 22.98 Evaluated at bid price : 23.25 Bid-YTW : 5.76 % |
| GWO.PR.Q | Insurance Straight | 1.50 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-10-28 Maturity Price : 22.08 Evaluated at bid price : 22.36 Bid-YTW : 5.81 % |
| CU.PR.K | Perpetual-Discount | 2.86 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-10-28 Maturity Price : 24.05 Evaluated at bid price : 24.43 Bid-YTW : 5.82 % |
| CU.PR.E | Perpetual-Discount | 7.32 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-10-28 Maturity Price : 22.31 Evaluated at bid price : 22.58 Bid-YTW : 5.50 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| BN.PF.N | FixedReset Disc | 39,900 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-10-28 Maturity Price : 23.09 Evaluated at bid price : 24.82 Bid-YTW : 5.70 % |
| BILP.PR.A | FixedReset Prem | 21,400 | YTW SCENARIO Maturity Type : Call Maturity Date : 2031-10-01 Maturity Price : 25.00 Evaluated at bid price : 25.06 Bid-YTW : 5.84 % |
| PWF.PR.F | Perpetual-Discount | 18,500 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-10-28 Maturity Price : 22.17 Evaluated at bid price : 22.45 Bid-YTW : 5.87 % |
| PVS.PR.N | SplitShare | 15,100 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2033-09-29 Maturity Price : 25.00 Evaluated at bid price : 25.00 Bid-YTW : 5.35 % |
| MFC.PR.F | FixedReset Ins Non | 14,500 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-10-28 Maturity Price : 21.20 Evaluated at bid price : 21.20 Bid-YTW : 5.85 % |
| PWF.PR.P | FixedReset Disc | 13,350 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-10-28 Maturity Price : 21.40 Evaluated at bid price : 21.40 Bid-YTW : 5.91 % |
| There were 2 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 |
| GWO.PR.G | Insurance Straight | Quote: 21.15 – 22.83 Spot Rate : 1.6800 Average : 1.1621 YTW SCENARIO |
| CU.PR.G | Perpetual-Discount | Quote: 19.00 – 21.20 Spot Rate : 2.2000 Average : 1.7758 YTW SCENARIO |
| ENB.PF.C | FixedReset Disc | Quote: 23.00 – 24.00 Spot Rate : 1.0000 Average : 0.5853 YTW SCENARIO |
| CU.PR.J | Perpetual-Discount | Quote: 21.80 – 26.00 Spot Rate : 4.2000 Average : 3.8283 YTW SCENARIO |
| POW.PR.B | Perpetual-Discount | Quote: 22.67 – 23.75 Spot Rate : 1.0800 Average : 0.7179 YTW SCENARIO |
| IFC.PR.F | Insurance Straight | Quote: 23.25 – 24.49 Spot Rate : 1.2400 Average : 0.8995 YTW SCENARIO |