{"id":24261,"date":"2014-01-22T23:33:13","date_gmt":"2014-01-23T04:33:13","guid":{"rendered":"http:\/\/prefblog.com\/?p=24261"},"modified":"2014-01-22T23:33:13","modified_gmt":"2014-01-23T04:33:13","slug":"january-22-2014","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=24261","title":{"rendered":"January 22, 2014"},"content":{"rendered":"

Here’s a headline we haven’t seen in a while: inflation in Japan<\/a>:<\/p>\n

The Bank of Japan refrained from boosting unprecedented easing as accelerating inflation marks progress in its bid to stamp out 15 years of falling prices in Asia\u2019s second-biggest economy.<\/p>\n

Governor Haruhiko Kuroda\u2019s board stuck to its pledge to expand the monetary base by an annual 60 trillion to 70 trillion yen ($671 billion) today after a two-day meeting in Tokyo, in line with the forecasts of all 36 economists surveyed by Bloomberg News. The BOJ maintained its projection that core consumer prices will rise 1.9 percent in the year starting April 2015, excluding the effect of sales-tax increases, and scrapped a reference to the economy facing \u201cuncertainty.\u201d
…<\/b>
Consumer prices excluding fresh food rose 1.2 percent in November from a year earlier, the fastest pace since 2008 and approaching the 2 percent target set a year ago. For the final quarter of 2013, analysts estimate inflation was 1.1 percent, according to a separate poll, nearly three times economists\u2019 0.4 percent forecast in a survey in April last year.<\/p><\/blockquote>\n

There’s also an indication of good news from the UK<\/a>:<\/p>\n

The UK’s unemployment rate has surprisingly fallen to 7.1% in the three months to November, according to official figures.<\/p>\n

The Office for National Statistics revealed the country’s jobless rate fell by 0.3% from the previous three month and was down 0.5% from June to August 2013.<\/p>\n

The figures mean the country’s unemployment rate is just 0.1% off the Bank of England’s 7% threshold for considering interest rate rises.<\/p><\/blockquote>\n

However, the usual suspect when it comes to bad economic news has not failed us<\/a>:<\/p>\n

The earth movers digging out a sandy pit in the beach town of Biarritz could be any construction site in France. Except the builder of the 300 homes and its workers are Spanish.<\/p>\n

In the neighboring town of Anglet, a Spanish company built the concert hall inaugurated this month. A kilometer up the road, in Bayonne, a Spanish company is building a 15-lodging apartment block.<\/p>\n

And that\u2019s just in a small corner of southwestern France.<\/p>\n

The losing French bidders are crying foul, saying the Spanish pay lower wages and cut corners on regulations. The Spanish, fleeing a construction slump and an unemployment rate of 26 percent at home, say they\u2019re just using European Union rules allowing free movement of businesses and workers. The French builders\u2019 inability to stop their Spanish counterparts from wresting business away highlights President Francois Hollande\u2019s uphill battle to make France more competitive.<\/p><\/blockquote>\n

Meanwhile the the Bank of Canada has been instructed to say<\/a>:<\/p>\n

it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1\/4 per cent and the deposit rate is 3\/4 per cent.<\/p>\n

Inflation in Canada has moved further below the 2 per cent target, owing largely to significant excess supply in the economy and heightened competition in the retail sector. The path for inflation is now expected to be lower than previously anticipated for most of the projection period. The Bank expects inflation to return to the 2 per cent target in about two years, as the effects of retail competition dissipate and excess capacity is absorbed.<\/p>\n

Global growth is expected to strengthen over the next two years, rising from 2.9 per cent in 2013 to 3.4 per cent in 2014 and 3.7 per cent in 2015. The United States will lead this acceleration, aided by diminishing fiscal drag, accommodative monetary policy and stronger household balance sheets. The improving U.S. outlook is affecting global bond, equity, and currency markets. Growth in other regions is evolving largely as projected in the Bank\u2019s October Monetary Policy Report (MPR). Global trade growth plunged after 2011, but is poised to recover as global demand strengthens.<\/p>\n

In Canada, growth improved in the second half of 2013. However, there have been few signs of the anticipated rebalancing towards exports and business investment. Stronger U.S. demand, as well as the recent depreciation of the Canadian dollar, should help to boost exports and, in turn, business confidence and investment. Meanwhile, recent data have been consistent with the Bank\u2019s expectation of a soft landing in the housing market and a stabilization of household indebtedness relative to income.<\/p>\n

Real GDP growth is projected to pick up from 1.8 per cent in 2013 to 2.5 per cent in both 2014 and 2015. This implies that the economy will return gradually to capacity over the next two years.<\/p>\n

Although the fundamental drivers of growth and future inflation appear to be strengthening, inflation is expected to remain well below target for some time, and therefore the downside risks to inflation have grown in importance. At the same time, risks associated with elevated household imbalances have not materially changed. Weighing these considerations, the Bank judges that the balance of risks remains within the zone articulated in October, and therefore has decided to maintain the target for the overnight rate at 1 per cent. The timing and direction of the next change to the policy rate will depend on how new information influences this balance of risks.<\/p><\/blockquote>\n

All this had the same effect as a rate cut, with the loonie dropping<\/a>:<\/p>\n

The dollar plunged to the lowest in more than four years today and returns on Canada\u2019s benchmark stock index were less than half of U.S. equities last year, underscoring an economy beset by the slowest rebound in exports since World War II. Consumers are tapped out with record household debt and governments are more focused on erasing budget deficits than providing stimulus.
…<\/b>
The dollar fell as much as 1 percent after Bank of Canada Governor Stephen Poloz said the direction of his next move will depend on the evolution of the economy, and a weaker currency should help the nation\u2019s exporters.<\/p><\/blockquote>\n

Meanwhile, there was some good news for Air Canada<\/a>:<\/p>\n

Air Canada\u2019s domestic pension plans have swung to a small surplus from a solvency deficit of $3.7-billion a year ago.<\/p>\n

The airline said on Wednesday preliminary estimates indicate that its pension plans will be in a \u201csmall surplus position\u201d at Jan. 1, 2014.<\/p>\n

Elimination of the deficit came about as a result of several factors, including a 13.8 per cent return on investments last year; amended pension benefits that are estimated to have trimmed the deficit by about $970-million; contributions by Air Canada for the year of $225-million; and the application of an estimated prescribed discount rate of 3.9 per cent to calculate future obligations.<\/p>\n

Air Canada booked a return of 11.8 per cent over the past four years, placing it in the first quartile for performance compared with large Canadian pension plans.<\/p><\/blockquote>\n

Finally comes the defence in the US vs. S&P lawsuit that we were all waiting for<\/a>:<\/p>\n

Government officials made no secret of their displeasure when Standard & Poor\u2019s downgraded the debt of the United States in 2011.<\/p>\n

But, according to Standard & Poor\u2019s, that indignation led to more than harsh words. It also motivated the government\u2019s lawsuit last year that accused S.& P. of fraud, the ratings agency claims.
…<\/b>
In a telephone call in August 2011, days after the downgrade was announced, an angry Mr. Geithner told Mr. McGraw that S.&P. had made an error in its assessment and that \u201cyou are accountable for that,\u201d according to an affidavit by Mr. McGraw that was filed on Monday in United States District Court for the Central District of California.<\/p>\n

\u201cYou have done an enormous disservice to yourselves and to your country,\u201d Mr. Geithner said, according to Mr. McGraw. The conduct of S.&P. would be \u201clooked at very carefully.\u201d<\/p><\/blockquote>\n

A disservice to themselves … a disservice to the country … it’s a good thing that he didn’t mention “investors” or one might think he understood the role of Credit Rating Agencies.<\/p>\n

There is speculation that yesterday’s RY new issue<\/a> could open the floodgates<\/a>:<\/p>\n

Canadian banks are likely to sell more than $20-billion worth of new shares, now that investors have showed they can stomach a new style of securities.<\/p>\n

This week Royal Bank of Canada became the first domestic lender to test investor appetite for a special type of preferred share that converts into common equity during a catastrophic crisis. The deal, originally for $200-million, sold out quickly, and was ultimately up-sized to $500-million, prompting rating agency Moody\u2019s Investor Service to estimate that more than $20-billion worth of these shares will eventually hit the market.
…<\/b>
\n\u201cWe\u2019ve all been waiting for the first bank to go ahead and do something,\u201d Moody\u2019s credit officer Dave Beattie said in an interview. Now that RBC has set a precedent, and a wildly popular one at that, \u201cI would expect other people to follow the format pretty closely.\u201d<\/p><\/blockquote>\n

It was a mixed day for the Canadian preferred share market, with PerpetualDiscounts up 42bp, FixedResets off 2bp and DeemedRetractibles gaining 11bp. BAM PerpetualDiscounts dominated the winning side of the Performance Highlights table. Volume was well above average.<\/p>\n

PerpetualDiscounts now yield 5.67%, equivalent to 7.37% interest at the standard equivalency factor of 1.3x. Long corporates<\/a> now yield about 4.6%, so the pre-tax interest-equivalent spread is now about 275bp, a significant widening from the 265bp reported January 15<\/a>.<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
HIMIPref™ Preferred Indices
These values reflect the December 2008 revision of the HIMIPref™ Indices<\/strong>
Values are provisional and are finalized monthly<\/td>\n<\/tr>\n
Index<\/td>\nMean
Current
Yield
(at bid)<\/td>\n		Median
YTW<\/td>\n		Median
Average
Trading
Value<\/td>\n		Median
Mod Dur
(YTW)<\/td>\n		Issues<\/td>\nDay’s Perf.<\/td>\nIndex Value<\/td>\n<\/tr>\n
Ratchet<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n0.5188 %<\/td>\n2,482.7<\/td>\n<\/tr>\n
FixedFloater<\/td>\n4.49 %<\/td>\n3.73 %<\/td>\n32,935<\/td>\n17.96<\/td>\n1<\/td>\n-0.4235 %<\/td>\n3,780.0<\/td>\n<\/tr>\n
Floater<\/td>\n3.01 %<\/td>\n3.02 %<\/td>\n71,430<\/td>\n19.67<\/td>\n3<\/td>\n0.5188 %<\/td>\n2,680.6<\/td>\n<\/tr>\n
OpRet<\/td>\n4.61 %<\/td>\n0.46 %<\/td>\n75,369<\/td>\n0.08<\/td>\n3<\/td>\n0.0256 %<\/td>\n2,677.7<\/td>\n<\/tr>\n
SplitShare<\/td>\n4.84 %<\/td>\n4.77 %<\/td>\n61,567<\/td>\n4.40<\/td>\n5<\/td>\n-0.1279 %<\/td>\n3,027.6<\/td>\n<\/tr>\n
Interest-Bearing<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n0.0256 %<\/td>\n2,448.4<\/td>\n<\/tr>\n
Perpetual-Premium<\/td>\n5.62 %<\/td>\n2.81 %<\/td>\n121,749<\/td>\n0.09<\/td>\n13<\/td>\n0.0551 %<\/td>\n2,328.5<\/td>\n<\/tr>\n
Perpetual-Discount<\/td>\n5.61 %<\/td>\n5.67 %<\/td>\n171,989<\/td>\n14.40<\/td>\n25<\/td>\n0.4220 %<\/td>\n2,367.6<\/td>\n<\/tr>\n
FixedReset<\/td>\n4.94 %<\/td>\n3.60 %<\/td>\n222,263<\/td>\n4.20<\/td>\n83<\/td>\n-0.0171 %<\/td>\n2,490.2<\/td>\n<\/tr>\n
Deemed-Retractible<\/td>\n5.15 %<\/td>\n4.47 %<\/td>\n167,906<\/td>\n1.97<\/td>\n42<\/td>\n0.1129 %<\/td>\n2,402.4<\/td>\n<\/tr>\n
FloatingReset<\/td>\n2.61 %<\/td>\n2.39 %<\/td>\n254,111<\/td>\n4.30<\/td>\n5<\/td>\n-0.2458 %<\/td>\n2,464.1<\/td>\n<\/tr>\n<\/table>\n\n\n\n\n\n\n\n\n\n\n\n
Performance Highlights<\/strong><\/td>\n<\/tr>\n
Issue<\/td>\nIndex<\/td>\nChange<\/td>\nNotes<\/td>\n<\/tr>\n
IAG.PR.G<\/td>\nFixedReset<\/td>\n-1.35 %<\/td>\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2017-06-30
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.56
\nBid-YTW : 3.70 %<\/td>\n<\/tr>\n
GWO.PR.N<\/td>\nFixedReset<\/td>\n-1.12 %<\/td>\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2025-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 22.03
\nBid-YTW : 4.52 %<\/td>\n<\/tr>\n
W.PR.J<\/td>\nPerpetual-Discount<\/td>\n1.11 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2044-01-22
\nMaturity Price : 24.25
\nEvaluated at bid price : 24.55
\nBid-YTW : 5.74 %<\/td>\n<\/tr>\n
BAM.PF.C<\/td>\nPerpetual-Discount<\/td>\n1.49 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2044-01-22
\nMaturity Price : 20.47
\nEvaluated at bid price : 20.47
\nBid-YTW : 5.99 %<\/td>\n<\/tr>\n
BAM.PF.D<\/td>\nPerpetual-Discount<\/td>\n1.71 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2044-01-22
\nMaturity Price : 20.77
\nEvaluated at bid price : 20.77
\nBid-YTW : 5.97 %<\/td>\n<\/tr>\n
CIU.PR.C<\/td>\nFixedReset<\/td>\n1.75 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2044-01-22
\nMaturity Price : 21.47
\nEvaluated at bid price : 21.47
\nBid-YTW : 3.68 %<\/td>\n<\/tr>\n
BAM.PR.N<\/td>\nPerpetual-Discount<\/td>\n1.81 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2044-01-22
\nMaturity Price : 20.21
\nEvaluated at bid price : 20.21
\nBid-YTW : 5.95 %<\/td>\n<\/tr>\n
BAM.PR.M<\/td>\nPerpetual-Discount<\/td>\n1.97 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2044-01-22
\nMaturity Price : 20.15
\nEvaluated at bid price : 20.15
\nBid-YTW : 5.96 %<\/td>\n<\/tr>\n<\/table>\n\n\n\n\n\n\n\n\n\n\n
Volume Highlights<\/strong><\/td>\n<\/tr>\n
Issue<\/td>\nIndex<\/td>\nShares
Traded<\/td>\n		Notes<\/td>\n<\/tr>\n
TRP.PR.E<\/td>\nFixedReset<\/td>\n310,130<\/td>\nRecent new issue<\/a>.
\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2044-01-22
\nMaturity Price : 23.08
\nEvaluated at bid price : 24.88
\nBid-YTW : 4.00 %<\/td>\n<\/tr>\n
MFC.PR.B<\/td>\nDeemed-Retractible<\/td>\n60,423<\/td>\nTD bought blocks of 15,000 and 24,400 from Canaccord at 21.11.
\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2025-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 21.10
\nBid-YTW : 6.78 %<\/td>\n<\/tr>\n
SLF.PR.C<\/td>\nDeemed-Retractible<\/td>\n47,511<\/td>\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2025-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 20.80
\nBid-YTW : 6.70 %<\/td>\n<\/tr>\n
RY.PR.I<\/td>\nFixedReset<\/td>\n43,995<\/td>\nWill be extended<\/a>.
\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.22
\nBid-YTW : 3.60 %<\/td>\n<\/tr>\n
RY.PR.C<\/td>\nDeemed-Retractible<\/td>\n35,900<\/td>\nScotia crossed 35,000 at 25.30.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2015-11-24
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.25
\nBid-YTW : 4.49 %<\/td>\n<\/tr>\n
TRP.PR.D<\/td>\nFixedReset<\/td>\n34,139<\/td>\nRBC crossed 10,000 at 24.70.
\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2044-01-22
\nMaturity Price : 23.04
\nEvaluated at bid price : 24.71
\nBid-YTW : 3.98 %<\/td>\n<\/tr>\n
There were 44 other index-included issues trading in excess of 10,000 shares.<\/td>\n<\/tr>\n<\/table>\n\n\n\n\n\n\n\n\n\n
Wide Spread Highlights<\/strong><\/td>\n<\/tr>\n
Issue<\/td>\nIndex<\/td>\nQuote Data and Yield Notes<\/td>\n<\/tr>\n
TD.PR.Q<\/td>\nDeemed-Retractible<\/td>\nQuote: 25.95 – 26.26
\nSpot Rate : 0.3100
\nAverage : 0.2105<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-03-02
\nMaturity Price : 25.75
\nEvaluated at bid price : 25.95
\nBid-YTW : -3.19 %<\/td>\n<\/tr>\n

ELF.PR.H<\/td>\nPerpetual-Discount<\/td>\nQuote: 23.57 – 23.96
\nSpot Rate : 0.3900
\nAverage : 0.2987<\/p>\n

YTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2044-01-22
\nMaturity Price : 23.23
\nEvaluated at bid price : 23.57
\nBid-YTW : 5.87 %<\/td>\n<\/tr>\n

VNR.PR.A<\/td>\nFixedReset<\/td>\nQuote: 25.15 – 25.41
\nSpot Rate : 0.2600
\nAverage : 0.1828<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2017-10-15
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.15
\nBid-YTW : 4.23 %<\/td>\n<\/tr>\n

MFC.PR.F<\/td>\nFixedReset<\/td>\nQuote: 22.72 – 22.93
\nSpot Rate : 0.2100
\nAverage : 0.1378<\/p>\n

YTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2025-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 22.72
\nBid-YTW : 4.47 %<\/td>\n<\/tr>\n

GWO.PR.N<\/td>\nFixedReset<\/td>\nQuote: 22.03 – 22.24
\nSpot Rate : 0.2100
\nAverage : 0.1414<\/p>\n

YTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2025-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 22.03
\nBid-YTW : 4.52 %<\/td>\n<\/tr>\n

TD.PR.O<\/td>\nDeemed-Retractible<\/td>\nQuote: 25.15 – 25.37
\nSpot Rate : 0.2200
\nAverage : 0.1542<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-10-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.15
\nBid-YTW : 3.93 %<\/td>\n<\/tr>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

Here’s a headline we haven’t seen in a while: inflation in Japan: The Bank of Japan refrained from boosting unprecedented easing as accelerating inflation marks progress in its bid to stamp out 15 years of …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[],"class_list":["post-24261","post","type-post","status-publish","format-standard","hentry","category-market-action"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/24261","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=24261"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/24261\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=24261"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=24261"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=24261"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}