Preferred Shares Traded in a Tight Price Range With Reduced Volumes in June

The preferred share market was quiet in June, trading in a tight price range with reduced volumes. The subdued nature of the activity, at least in part, reflected uncertainty in global financial markets due to increasing risk of a global trade war developing. At the beginning of the month, the United States imposed tariffs on…

Preferred Shares Rebounded Nicely in May

Following three consecutive down months, preferred share prices rebounded nicely in May. Share prices rose almost 2.0% in the first two weeks of the month, due to a lack of new issues combined with good investor demand. The pick-up in demand was explained, at least partially, by rising 5-year bond yields in early May, which…

Preferred Shares Continued to Take a Breather and Absorbed Some Issuer Specific News in April

The preferred share market had another month of negative returns, the third month in a row.  The market continued to take a breather and absorbed some issuer specific news in April. The S&P/TSX Preferred Share index returned -0.42% in the month.

Equity Market Volatility Caused Weakness in Preferred Share Prices in March

For the second month in a row, equity market volatility caused weakness in preferred share prices. During March, U.S. president Trump threatened to impose tariffs; first on steel and aluminum and then on certain goods imported from China. The U.S. actions, if carried out, risked initiating a trade war that would reduce global growth and…

Following a Strong Start to the Year, Preferred Shares Gave Back Much of Their Gains in February

Following a strong start to the year in January, the preferred share market gave back much of its gains in February. Preferred shares were affected by the substantial stock market volatility that occurred at the beginning of the month. The S&P500 equity index fell over 10% from January 31st through midday February 9th, while the…

Canadian Preferred Shares Demonstrated Their Diversification Value as They Enjoyed Good Gains in January

The Canadian preferred share market once again demonstrated its diversification value as it enjoyed good gains while both Canadian bonds and common stocks lost ground in January. The Bank of Canada (BOC) raised its administered rates this month, and that helped the preferred share market absorb significant new issue supply and move to higher prices.…

Canadian Preferred Shares Mixed in December From Illiquid Conditions

Preferred share prices declined at the start of December, but ground back toward unchanged levels in the illiquid conditions in the second half of the month. The early weakness was due to new issue supply, as well as selling related to unwinding of structured note hedges. The S&P/TSX Preferred Share Index returned +0.05% in December.

Good Investor Demand Pushed Preferred Share Prices Higher and Yields Lower in November

Following several weeks without any issues, two new ones came in late November, but were insufficient to satisfy investors? appetites. The anticipated unwinding of structured note hedges linked to passive preferred share ETFs continued, but was offset by demand for actively managed alternatives. The S&P/TSX Preferred Share Index returned 0.70% in November.

Good Investor Demand Push Preferred Share Prices Higher in October

The preferred share market enjoyed strong returns in October. A lack of new issues, concerns about lower bank issuance, and good investor demand combined to push preferred share prices higher. Some selling late in the month, related to ETF redemptions and reduced institutional interest, caused prices to decline slightly, thereby halting the rally. The S&P/TSX…

Preferred Share Market Enjoyed a Strong Month in September as Investors Focused on the Favourable Economic Conditions

The preferred share market enjoyed a strong month in September even as other fixed income instruments, such as bonds, struggled. Preferred share investors focussed on the favourable economic conditions and good corporate creditworthiness, and ignored geopolitical events and hurricanes. A somewhat surprising interest rate increase by the Bank of Canada (BOC) had positive ripple effects…

Preferred Share Market Declined in August as Risk-Off Sentiment Permeated Most Financial Markets

The preferred share market declined in August as risk-off sentiment permeated most financial markets. Geopolitical concerns arising from a nuclear shouting match between North Korea and the U.S. were the main cause of the more cautious investor attitude. Terror attacks in Europe and the threat of a U.S. government shutdown exacerbated the risk-off sentiment. In…

Preferred Shares Enjoy Another Good Month in July, Prompted by Rising Bond Yields and Interest Rates

The preferred share market enjoyed another good month in July. Rising bond yields and interest rates prompted higher prices for rate reset and floating rate issues, but lower prices for perpetual issues. Fixed rate reset issues gained 2.2% in the month, while perpetual issues declined 1.8%. On balance, the S&P/TSX Preferred Share index returned 1.11%…

Strong Performance by Rate Reset Issues Propelled Preferred Shares to a Robust Return in June

Strong performance by rate reset issues propelled the S&P/TSX Preferred Share index to a robust 2.84% return in June. Rising bond yields led to increased buying interest in rate reset shares, but growth in preferred share Exchange Traded Funds (ETFs) were also a factor. Approximately $260 million of new deposits flowed into the largest ETFs,…

Preferred Shares Rally into Early April, But Finish the Month Slightly Lower

The Canadian preferred share market initially extended its rally into early April, but prices declined over the balance of the month to finish slightly lower than where they began. In part, the pullback later in the month could have been market fatigue as preferred share prices have risen almost continuously since mid-November. As well, some…

Canadian Preferred Shares Continue Their Upward Pattern in March

Canadian preferred share prices continued to move upward in a seesaw pattern during March. An absence of new issues and occasional ETF flows were contributing factors behind the market strength. Interestingly, increased purchases of preferred share ETFs had a delayed reaction to underlying preferred share prices. As well, when ETF volumes declined, it led to…

Canadian Preferred Shares Continued to Move Upward in Price in February

Following their very strong gains in January, Canadian preferred shares continued to move upward in price in February, but at a more subdued pace. Reduced activity in preferred share Exchange Traded Funds (ETFs) probably accounted for the smaller preferred share gains. The Bank of Montreal Laddered Rate Reset ETF (ZPR) experienced a 45% drop in…