The Bank of Canada conveyed no surprises in its rate announcement:
On a quarterly basis, growth in Canada is expected to pick up to about 2.5 per cent in the second half of this year. Despite this expected pickup, with the weak growth in the second half of 2012, annual average growth is now projected to be 1.5 per cent in 2013. The economy is then projected to grow by 2.8 per cent in 2014 and 2.7 per cent in 2015, reaching full capacity in mid-2015 – later than anticipated in the January MPR.
Total CPI and core inflation have remained low in recent months, broadly in line with expectations in the January MPR. Muted core inflation reflects material excess supply in the economy, heightened competitive pressures in the retail sector, and some special factors such as slower increases in regulated prices and the pass-through of previous declines in agricultural prices to consumer prices. Total CPI inflation has been restrained by low core inflation and declining mortgage interest costs, with some offset from higher gasoline prices.
Both total and core inflation are expected to remain subdued in coming quarters before gradually rising to 2 per cent by mid-2015 as the economy returns to full capacity, the special factors that are weighing on core inflation subside, and inflation expectations remain well-anchored.
The Canadian preferred share market got hit today, with PerpetualPremiums off 8bp, FixedResets down 18bp and DeemedRetractibles losing 21bp. Volatility was minimal. Volume was very high.
PerpetualDiscounts now yield 4.82%, equivalent to 6.27% interest at the standard equivalency factor of 1.3x. Long Corporates now yield a little under 4.1%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) is now about 220bp, a significant widening from the 210bp reported April 3.
| 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 | -0.7248 % | 2,587.1 |
| FixedFloater | 4.05 % | 3.36 % | 32,538 | 18.67 | 1 | 0.0000 % | 4,055.6 |
| Floater | 2.69 % | 2.88 % | 88,706 | 20.06 | 4 | -0.7248 % | 2,793.4 |
| OpRet | 4.79 % | 0.42 % | 54,742 | 0.17 | 5 | 0.0154 % | 2,614.7 |
| SplitShare | 4.80 % | 4.02 % | 130,600 | 4.13 | 5 | 0.1027 % | 2,960.2 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0154 % | 2,390.9 |
| Perpetual-Premium | 5.18 % | 3.10 % | 82,131 | 0.86 | 32 | -0.0822 % | 2,381.4 |
| Perpetual-Discount | 4.83 % | 4.82 % | 175,942 | 15.76 | 4 | -0.0607 % | 2,691.3 |
| FixedReset | 4.93 % | 2.78 % | 238,676 | 3.78 | 80 | -0.1783 % | 2,503.6 |
| Deemed-Retractible | 4.87 % | 3.55 % | 125,778 | 0.59 | 44 | -0.2120 % | 2,453.1 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| BAM.PR.C | Floater | -2.88 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-04-17 Maturity Price : 17.53 Evaluated at bid price : 17.53 Bid-YTW : 3.01 % |
| MFC.PR.J | FixedReset | -1.10 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2018-03-19 Maturity Price : 25.00 Evaluated at bid price : 26.15 Bid-YTW : 3.07 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| PWF.PR.S | Perpetual-Premium | 202,970 | Scotia crossed 75,000 at 25.45. RBC crossed blocks of 75,000 and 40,000, both at 25.45. YTW SCENARIO Maturity Type : Call Maturity Date : 2022-04-30 Maturity Price : 25.00 Evaluated at bid price : 25.40 Bid-YTW : 4.58 % |
| TRP.PR.D | FixedReset | 89,897 | TD crossed 23,400 at 26.14; Scotia crossed 35,000 at 26.10. YTW SCENARIO Maturity Type : Call Maturity Date : 2019-04-30 Maturity Price : 25.00 Evaluated at bid price : 26.04 Bid-YTW : 3.34 % |
| POW.PR.B | Perpetual-Premium | 76,256 | Scotia crossed 50,000 at 25.47; TD crossed 20,000 at the same price. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-05-17 Maturity Price : 25.00 Evaluated at bid price : 25.45 Bid-YTW : -15.40 % |
| ENB.PR.F | FixedReset | 71,274 | Desjardins crossed 49,200 at 25.95. YTW SCENARIO Maturity Type : Call Maturity Date : 2018-06-01 Maturity Price : 25.00 Evaluated at bid price : 25.88 Bid-YTW : 3.37 % |
| BNS.PR.R | FixedReset | 43,990 | National crossed 30,000 at 25.32. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.26 Bid-YTW : 3.02 % |
| ENB.PR.D | FixedReset | 32,811 | Desjardins crossed 19,400 at 25.92. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-04-17 Maturity Price : 23.42 Evaluated at bid price : 25.84 Bid-YTW : 3.37 % |
| There were 51 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| FTS.PR.J | Perpetual-Premium | Quote: 26.00 – 27.00 Spot Rate : 1.0000 Average : 0.6933 YTW SCENARIO |
| BAM.PR.C | Floater | Quote: 17.53 – 18.20 Spot Rate : 0.6700 Average : 0.4249 YTW SCENARIO |
| MFC.PR.J | FixedReset | Quote: 26.15 – 26.48 Spot Rate : 0.3300 Average : 0.2289 YTW SCENARIO |
| TRI.PR.B | Floater | Quote: 24.05 – 24.55 Spot Rate : 0.5000 Average : 0.4024 YTW SCENARIO |
| TD.PR.O | Deemed-Retractible | Quote: 25.73 – 26.00 Spot Rate : 0.2700 Average : 0.1749 YTW SCENARIO |
| BMO.PR.L | Deemed-Retractible | Quote: 26.70 – 26.95 Spot Rate : 0.2500 Average : 0.1606 YTW SCENARIO |