December 13, 2023

On Wednesday, the Fed delivered quite the Christmas Present indicating that the rate increases are over and that its likely that there will be three rate cuts by the end of next year.

Stocks and bonds jumped as this news came out at 2 pm eastern.

The S&P 500 ended the day up 1.4% and Toronto was up an impressive 2.0%.

The 5 year government of Canada is down to 3.36%. That’s down more than a full percentage point versus is recent peak of about 4.4% in early October. That is a huge decline and should certainly bring about lower 5 year mortgage rates.

Among the more notable gainers today were:

West Fraser Timber up 5.8%
AutoCanada up 8.0%
RioCan up 6.1%
Toll brothers  up 4.4%

I would expect the perpetual preferred shares to increase on this news but they did not seem to move much today which could be due to their thin trading volumes.

The Rate Reset preferred are always harder to predict. Those that have recently reset to higher dividends should do well given the higher rates will be in place for 5 years. Those that are soon to reset could decline on this news since their reset levels will be lower with the lower 5 year government bond yield.

All in all, a very good day in the markets!

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