Information received since the Federal Open Market Committee met in July indicates that the labor market remains strong and that economic activity has been rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although household spending has been rising at a strong pace, business fixed investment and exports have weakened. On a 12-month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the Committee decided to lower the target range for the federal funds rate to 1-3/4 to 2 percent. This action supports the Committee’s view that sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective are the most likely outcomes, but uncertainties about this outlook remain. As the Committee contemplates the future path of the target range for the federal funds rate, it will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective.
In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.
Voting for the monetary policy action were Jerome H. Powell, Chair, John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Charles L. Evans; and Randal K. Quarles. Voting against the action were James Bullard, who preferred at this meeting to lower the target range for the federal funds rate to 1-1/2 to 1-3/4 percent; and Esther L. George and Eric S. Rosengren, who preferred to maintain the target range at 2 percent to 2-1/4 percent.
The voting was interesting, with two hawks and one dove dissenting, which underscores the uncertainty that prevails globally. Of course, there’s there’s one guy who’s never uncertain:
“Jay Powell and the Federal Reserve Fail Again. No “guts,” no sense, no vision! A terrible communicator!,” Mr. Trump said in a tweet shortly after the Fed’s announcement, referring to Jerome H. Powell, the Fed Chair.
Equities fell initially, and then:
But stocks reversed their slide during Powell’s news conference following the policy decision, during which he said the Fed is closely monitoring economic data, trade and global growth risks, but did not see imminent recession, or think the central bank would cut rates to negative territory.
…
U.S. Treasury yields dipped following Powell’s remarks.Benchmark 10-year notes last rose 7/32 in price to yield 1.7909%, from 1.814% late on Tuesday. The 30-year bond last rose 23/32 in price to yield 2.2471%, from 2.28% late on Tuesday.
The dollar strengthened following the Fed’s rate cut. The dollar index rose 0.28%, with the euro down 0.36% to $1.1031.
And in the frozen north:
The Canadian dollar weakened to a two-week low against its U.S. counterpart on Wednesday as oil prices fell and after the U.S. Federal Reserve was less dovish than some investors had anticipated.
…
Canadian government bond prices were higher across a flatter
yield curve. The two-year rose 2.5 Canadian cents to yield 1.598% and the 10-year was up 15 Canadian cents to yield 1.433%.The 10-year yield touched its lowest intraday since Sept. 12 at 1.409%.
PerpetualDiscounts now yield 5.57%, equivalent to 7.24% interest at the standard equivalency factor of 1.3x. Long corporates now yield 3.48%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has plunged to 375bp from the 415bp reported September 11.
| 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< br>Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
| Ratchet | 0.00 % | 0.00 % | 0 | 0.0 0 |
0 | -1.1797 % | 1,898.2 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -1.1797 % | 3,483.0 |
| Floater | 6.35 % | 6.47 % | 56,467 | 13.25 | 4 | -1.1797 % | 2,007.3 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1014 % | 3,379.9 |
| SplitShare | 4.66 % | 4.61 % | 56,797 | 4.02 | 7 | -0.1014 % | 4,036.3 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1014 % | 3,149.3 |
| Perpetual-Premium | 5.61 % | -14.96 % | 68,907 | 0.09 | 6 | 0.0130 % | 2,985.2 |
| Perpetual-Discount | 5.42 % | 5.57 % | 62,979 | 14.48 | 28 | 0.2229 % | 3,159.7 |
| FixedReset Disc | 5.56 % | 5.63 % | 173,943 | 14.2 6 |
73 | -0.4811 % | 2,063.8 |
| Deemed-Retractible | 5.24 % | 5.84 % | 74,629 | 7.91 | 27 | 0.2207 % | 3,142.8 |
| FloatingReset | 4.50 % | 6.70 % | 61,966 | 8.04 | 3 | 0.0588 % | 2,363.2 |
| FixedReset Prem< /td> | 5.25 % | 4.00 % | 126,743 | 1.60 | 14 | 0.0112 % | 2,584.3 |
| FixedReset Bank Non | 1.98 % | 4.46 % | 85,862 | 2.29 | 3 | -0.2632 % | 2,662.5 |
| FixedReset Ins Non | 5.46 % | 8.01 % | 107,184 | 7.90 | 21 | -0.3479 % | 2,116.3 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| BAM.PF.G | FixedReset Disc | -4.48 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 16.85 Evaluated at bid price : 16.85 Bid-YTW : 6.48 % |
| BAM.PF.E | FixedReset Disc | -2.23 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 15.75 Evaluated at bid price : 15.75 Bid-YTW : 6.49 % |
| RY.PR.M | FixedReset Disc | -2.00 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 18.13 Evaluated at bid price : 18.13 Bid-YTW : 5.70 % |
| HSE.PR.A | FixedReset Disc | -1.90 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 11.35 Evaluated at bid price : 11.35 Bid-YTW : 6.95 % |
| PWF.PR.A | Floater | -1.84 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 11.76 Evaluated at bid price : 11.76 Bid-YTW : 5.95 % |
| BIP.PR.F | FixedReset Disc | -1.81 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 21.39 Evaluated at bid price : 21.70 Bid-YTW : 5.89 % |
| TD.PF.B | FixedReset Disc | -1.73 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 17.05 Evaluated at bid price : 17.05 Bid-YTW : 5.58 % |
| TD.PF.A | FixedReset Disc | -1.62 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 17.01 Evaluated at bid price : 17.01 Bid-YTW : 5.59 % |
| NA.PR.G | FixedReset Disc | -1.61 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 19.51 Evaluated at bid price : 19.51 Bid-YTW : 5.77 % |
| RY.PR.S | FixedReset Disc | -1.60 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 19.67 Evaluated at bid price : 19.67 Bid-YTW : 5.28 % |
| RY.PR.Z | FixedReset Disc | -1.53 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 17.33 Evaluated at bid price : 17.33 Bid-YTW : 5.41 % |
| SLF.PR.H | FixedReset Ins Non | -1.45 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 15.62 Bid-YTW : 9.17 % |
| CM.PR.S | FixedReset Disc | -1.44 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 18.50 Evaluated at bid price : 18.50 Bid-YTW : 5.59 % |
| TD.PF.E | FixedReset Disc | -1.42 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 19.46 Evaluated at bid price : 19.46 Bid-YTW : 5.65 % |
| MFC.PR.Q | FixedReset Ins Non | -1.41 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 18.20 Bid-YTW : 8.35 % |
| BAM.PR.B | Floater | -1.39 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 10.64 Evaluated at bid price : 10.64 Bid-YTW : 6.52 % |
| EMA.PR.C | FixedReset Disc | -1.38 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 17.90 Evaluated at bid price : 17.90 Bid-YTW : 6.07 % |
| IAF.PR.I | FixedReset Ins Non | -1.33 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 19.30 Bid-YTW : 7.75 % |
| BMO.PR.S | FixedReset Disc | -1.30 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 17.50 Evaluated at bid price : 17.50 Bid-YTW : 5.54 % |
| CM.PR.P | FixedReset Disc | -1.29 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 16.10 Evaluated at bid price : 16.10 Bid-YTW : 5.91 % |
| NA.PR.W | FixedReset Disc | -1.25 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 15.85 Evaluated at bid price : 15.85 Bid-YTW : 6.00 % |
| BAM.PR.R | FixedReset Disc | -1.15 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 14.58 Evaluated at bid price : 14.58 Bid-YTW : 6.40 % |
| CM.PR.R | FixedReset Disc | -1.12 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 21.20 Evaluated at bid price : 21.20 Bid-YTW : 5.74 % |
| BNS.PR.I | FixedReset Disc | -1.07 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 20.30 Evaluated at bid price : 20.30 Bid-YTW : 5.21 % |
| MFC.PR.J | FixedReset Ins Non | -1.05 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 18.80 Bid-YTW : 7.97 % |
| BAM.PR.K | Floater | -1.04 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 10.45 Evaluated at bid price : 10.45 Bid-YTW : 6.64 % |
| MFC.PR.N | FixedReset Ins Non | -1.01 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 15.76 Bid-YTW : 9.53 % |
| BMO.PR.E | FixedReset Disc | -1.00 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 19.80 Evaluated at bid price : 19.80 Bid-YTW : 5.55 % |
| PWF.PR.T | FixedReset Disc | 1.46 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 17.40 Evaluated at bid price : 17.40 Bid-YTW : 5.78 % |
| GWO.PR.T | Deemed-Retractible | 1.50 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.75 Bid-YTW : 5.81 % |
| GWO.PR.S | Deemed-Retractible | 1.63 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.29 Bid-YTW : 5.63 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| RY.PR.Q | FixedReset Prem | 70,400 | YTW SCENARIO Maturity Type : Call Maturity Date : 2021-05-24 Maturity Price : 25.00 Evaluated at bid price : 25.70 Bid-YTW : 4.00 % |
| HSE.PR.C | FixedReset Disc | 37,023 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 16.84 Evaluated at bid price : 16.84 Bid-YTW : 6.91 % |
| RY.PR.S | FixedReset Disc | 29,500 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 19.67 Evaluated at bid price : 19.67 Bid-YTW : 5.28 % |
| MFC.PR.R | FixedReset Ins Non | 26,200 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.99 Bid-YTW : 5.75 % |
| SLF.PR.J | FloatingReset | 24,400 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 13.34 Bid-YTW : 10.54 % |
| IFC.PR.A | FixedReset Ins Non | 22,229 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 14.58 Bid-YTW : 9.81 % |
| There were 21 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| BNS.PR.D | FloatingReset | Quote: 24.50 – 24.99 Spot Rate : 0.4900 Average : 0.3522 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.50 Bid-YTW : 3.67 % |
| TD.PF.E | FixedReset Disc | Quote: 19.46 – 19.86 Spot Rate : 0.4000 Average : 0.2848 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 19.46 Evaluated at bid price : 19.46 Bid-YTW : 5.65 % |
| MFC.PR.B | Deemed-Retractible | Quote: 21.60 – 22.04 Spot Rate : 0.4400 Average : 0.3286 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.60 Bid-YTW : 6.51 % |
| BAM.PR.B | Floater | Quote: 10.64 – 10.90 Spot Rate : 0.2600 Average : 0.1545 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 10.64 Evaluated at bid price : 10.64 Bid-YTW : 6.52 % |
| BAM.PR.X | FixedReset Disc | Quote: 12.79 – 13.19 Spot Rate : 0.4000 Average : 0.2982 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 12.79 Evaluated at bid price : 12.79 Bid-YTW : 6.29 % |
| TD.PF.B | FixedReset Disc | Quote: 17.05 – 17.38 Spot Rate : 0.3300 Average : 0.2285 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-09-18 Maturity Price : 17.05 Evaluated at bid price : 17.05 Bid-YTW : 5.58 % |