The Fed stood pat with hawkish dissents:
The Federal Open Market Committee approved the following statement for release by a 9 – 3 vote:
The Committee decided to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 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 solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little.
Inflation remains elevated relative to the Committee’s 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability.
Voting against the monetary policy action were Beth M. Hammack, Neel Kashkari, and Lorie K. Logan, who preferred to raise the target range for the federal funds rate by 1/4 percentage point at this meeting.
Bonds got clobbered:
“Let me reiterate: There is no soft inflation target,” Warsh said in remarks after the Fed’s highly anticipated meeting. “There is no soft implicit target, not on this committee’s watch. There’s only a target, and it’s 2%.”
The bond market called his bluff.
Long-term bond yields surged during Warsh’s remarks, with the 30-year US Treasury yield jumping from around 5.1% to 5.21%, its highest level since 2007. The 10-year yield jumped from just above 4.61% to almost 4.69%, nearing its highest level in over a year.
…
Markets are pricing in a 57% chance the Fed raises interest rates in September, according to CME FedWatch, a real-time forecasting tool. This is down from almost 70% earlier this afternoon, though roughly in line with yesterday’s odds.
Equities got hammered:
Oil prices were up roughly 8% after major airstrikes resumed in the Middle East, raising the specter of further disruptions to already impaired global energy supplies. The rally was compounded by industry data showing a drop in U.S. crude inventories.
…
Fed funds futures traders are now pricing in 60% odds of a rate hike in September.
The Dow Jones Industrial Average fell 2.2%, to 51,594.86, for its worst day since April 2025. The S&P 500 dropped 1.5%, to 7,316.39 and the Nasdaq Composite was down 1.7% at 24,442.94. The S&P/TSX Composite index ended down 415.92 points, or 1.2%, at 35,333.78, after posting a record closing high on Tuesday.
The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations for the Fed, fell 5 basis points to 4.227% after rising to 4.339%. Markets had been pricing in a roughly one-in-three chance of a hike heading into the meeting.
But the yield on the U.S. 30-year bond jumped 7.1 basis points to 5.167% and was on track for its biggest daily gain since May 15, suggesting traders expect a build up of longer-term inflationary pressures.
…
Meta Platforms dropped 4% in extended trade after the social media company said it now expects 2026 capital expenditure to be between US$130 billion and US$145 billion, compared with its prior forecast of US$125 billion to US$145 billion. Also after the bell, Microsoft climbed 0.6% after it topped Wall Street estimates for quarterly cloud revenue growth, a sign its massive spending on AI infrastructure was paying off.
PerpetualDiscounts now yield 5.54%, equivalent to 7.20% interest at the standard conversion factor of 1.3x. Long corporates yielded 5.15% on 2026-07-29. Therefore the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has remained constant at the 205bp reported July 22.
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 |
-0.3974 % |
2,635.9 |
| FixedFloater |
0.00 % |
0.00 % |
0 |
0.00 |
0 |
-0.3974 % |
4,963.9 |
| Floater |
5.48 % |
5.57 % |
35,742 |
14.55 |
3 |
-0.3974 % |
2,860.7 |
| OpRet |
0.00 % |
0.00 % |
0 |
0.00 |
0 |
0.0237 % |
3,641.7 |
| SplitShare |
4.78 % |
4.96 % |
62,966 |
2.64 |
5 |
0.0237 % |
4,348.9 |
| Interest-Bearing |
0.00 % |
0.00 % |
0 |
0.00 |
0 |
0.0237 % |
3,393.2 |
| Perpetual-Premium |
5.65 % |
-7.11 % |
53,391 |
0.09 |
7 |
0.1798 % |
3,098.6 |
| Perpetual-Discount |
5.49 % |
5.54 % |
40,561 |
14.56 |
27 |
0.2092 % |
3,439.7 |
| FixedReset Disc |
5.60 % |
5.89 % |
97,028 |
13.92 |
19 |
-0.1283 % |
3,393.1 |
| Insurance Straight |
5.33 % |
5.43 % |
48,331 |
14.71 |
20 |
0.2142 % |
3,376.7 |
| FloatingReset |
0.00 % |
0.00 % |
0 |
0.00 |
0 |
-0.1283 % |
4,143.0 |
| FixedReset Prem |
5.88 % |
4.35 % |
77,697 |
2.14 |
29 |
0.0212 % |
2,672.0 |
| FixedReset Bank Non |
0.00 % |
0.00 % |
0 |
0.00 |
0 |
-0.1283 % |
3,468.4 |
| FixedReset Ins Non |
5.15 % |
4.41 % |
56,052 |
1.99 |
14 |
0.3633 % |
3,314.5 |
| Performance Highlights |
| Issue |
Index |
Change |
Notes |
| BN.PF.E |
FixedReset Disc |
-1.74 % |
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2056-07-29
Maturity Price : 22.77
Evaluated at bid price : 23.75
Bid-YTW : 5.94 % |
| CCS.PR.C |
Insurance Straight |
-1.49 % |
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2056-07-29
Maturity Price : 22.82
Evaluated at bid price : 23.10
Bid-YTW : 5.46 % |
| BN.PF.F |
FixedReset Prem |
-1.35 % |
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2056-07-29
Maturity Price : 23.28
Evaluated at bid price : 24.80
Bid-YTW : 6.07 % |
| BN.PR.K |
Floater |
-1.14 % |
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2056-07-29
Maturity Price : 13.90
Evaluated at bid price : 13.90
Bid-YTW : 5.67 % |
| FTS.PR.J |
Perpetual-Discount |
-1.08 % |
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2056-07-29
Maturity Price : 22.60
Evaluated at bid price : 22.85
Bid-YTW : 5.27 % |
| BMO.PR.E |
FixedReset Prem |
-1.06 % |
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2028-11-25
Maturity Price : 25.00
Evaluated at bid price : 27.10
Bid-YTW : 3.58 % |
| ENB.PR.Y |
FixedReset Disc |
-1.02 % |
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2056-07-29
Maturity Price : 22.58
Evaluated at bid price : 23.26
Bid-YTW : 6.01 % |
| MFC.PR.N |
FixedReset Ins Non |
1.15 % |
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2030-03-20
Maturity Price : 25.00
Evaluated at bid price : 25.49
Bid-YTW : 4.78 % |
| CU.PR.C |
FixedReset Prem |
1.20 % |
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2027-06-01
Maturity Price : 25.00
Evaluated at bid price : 25.30
Bid-YTW : 4.77 % |
| PWF.PR.S |
Perpetual-Discount |
1.39 % |
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2056-07-29
Maturity Price : 21.65
Evaluated at bid price : 21.90
Bid-YTW : 5.50 % |
| PWF.PR.R |
Perpetual-Discount |
1.67 % |
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2056-07-29
Maturity Price : 24.65
Evaluated at bid price : 24.91
Bid-YTW : 5.54 % |
| GWO.PR.R |
Insurance Straight |
2.01 % |
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2056-07-29
Maturity Price : 22.06
Evaluated at bid price : 22.29
Bid-YTW : 5.43 % |
| SLF.PR.G |
FixedReset Ins Non |
2.07 % |
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2056-07-29
Maturity Price : 21.38
Evaluated at bid price : 21.69
Bid-YTW : 5.25 % |
| BN.PR.M |
Perpetual-Discount |
2.28 % |
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2056-07-29
Maturity Price : 21.28
Evaluated at bid price : 21.55
Bid-YTW : 5.56 % |
| ENB.PF.E |
FixedReset Disc |
2.39 % |
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2056-07-29
Maturity Price : 22.88
Evaluated at bid price : 24.02
Bid-YTW : 6.03 % |
| Volume Highlights |
| Issue |
Index |
Shares
Traded |
Notes |
| BN.PF.E |
FixedReset Disc |
52,375 |
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2056-07-29
Maturity Price : 22.77
Evaluated at bid price : 23.75
Bid-YTW : 5.94 % |
| TD.PF.A |
FixedReset Prem |
44,100 |
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2029-10-31
Maturity Price : 25.00
Evaluated at bid price : 25.48
Bid-YTW : 4.35 % |
| BMO.PR.E |
FixedReset Prem |
18,228 |
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2028-11-25
Maturity Price : 25.00
Evaluated at bid price : 27.10
Bid-YTW : 3.58 % |
| GWO.PR.I |
Insurance Straight |
16,534 |
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2056-07-29
Maturity Price : 21.30
Evaluated at bid price : 21.30
Bid-YTW : 5.34 % |
| NA.PR.C |
FixedReset Prem |
14,612 |
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2027-11-15
Maturity Price : 25.00
Evaluated at bid price : 26.16
Bid-YTW : 3.11 % |
| BN.PF.M |
FixedReset Prem |
11,100 |
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2031-01-01
Maturity Price : 25.00
Evaluated at bid price : 26.25
Bid-YTW : 4.53 % |
| There were 1 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 |
| CCS.PR.C |
Insurance Straight |
Quote: 23.10 – 24.00
Spot Rate : 0.9000
Average : 0.6273
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2056-07-29
Maturity Price : 22.82
Evaluated at bid price : 23.10
Bid-YTW : 5.46 % |
| BN.PF.F |
FixedReset Prem |
Quote: 24.80 – 25.80
Spot Rate : 1.0000
Average : 0.7610
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2056-07-29
Maturity Price : 23.28
Evaluated at bid price : 24.80
Bid-YTW : 6.07 % |
| BN.PF.E |
FixedReset Disc |
Quote: 23.75 – 24.70
Spot Rate : 0.9500
Average : 0.7496
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2056-07-29
Maturity Price : 22.77
Evaluated at bid price : 23.75
Bid-YTW : 5.94 % |
| CU.PR.D |
Perpetual-Discount |
Quote: 22.60 – 23.10
Spot Rate : 0.5000
Average : 0.3463
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2056-07-29
Maturity Price : 22.33
Evaluated at bid price : 22.60
Bid-YTW : 5.50 % |
| BMO.PR.E |
FixedReset Prem |
Quote: 27.10 – 27.50
Spot Rate : 0.4000
Average : 0.2586
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2028-11-25
Maturity Price : 25.00
Evaluated at bid price : 27.10
Bid-YTW : 3.58 % |
| FTS.PR.J |
Perpetual-Discount |
Quote: 22.85 – 23.35
Spot Rate : 0.5000
Average : 0.3676
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2056-07-29
Maturity Price : 22.60
Evaluated at bid price : 22.85
Bid-YTW : 5.27 % |