Preferred stocks tumble as jobs data comes in mixed; Deutsche Bank paper bucks the trend

By Stephanie N. Rotondo

Seattle, Feb. 5 – Preferred stocks continued to wane in Friday trading, following a fresh jobs number that was “kind of positive on the one side and kind of negative on the other,” a trader said.

The Wells Fargo Hybrid and Preferred Securities index traded off 59 basis points by Friday’s closing bell. The index was off 23 bps at mid-morning.

The latest report from the Labor Department showed non-farm payrolls increasing by 151,000 jobs in January, resulting in a lower unemployment rate of 4.9%.

However, analysts had been expecting an addition of 190,000 jobs while the unemployment rate held steady at 5%.

Additionally, data for November and December was downwardly revised to reflect 2,000 fewer jobs added in those months than was previously thought.

The news was also increasing bets that the Federal Reserve would choose to raise interest rates in March.

On top of the jobs report, one preferred market source opined that the day’s declines were due to the fact that investors are “concerned about credit in the wake of this week’s [poor earnings] from Credit Suisse, followed by restructuring charges at other European banks.”

The source said recent bad news from Deutsche Bank AG was playing its role – though that name was bucking the day’s downward trend.

The German bank’s preferreds have been on the decline of late amid a flurry of bad news and concerns about the company’s leverage and rising legal costs.

But come Friday trading, “Deutsche Bank was finally catching a bid,” a trader said.

The 7.6% trust preferred securities (NYSE: DTK) were up $1.03, or 4.72%, at $22.86, as the 8.05% TruPs (NYSE: DKT) improved 92 cents, or 4.09%, at $23.44.

By comparison, the 7.6% paper was trading with a $26.00 handle in January.

Both issues dominated trading for the day. More than 2 million of the 7.6% paper moved, while another 1.63 million shares of the 8.05% securities traded.

As to what was driving the paper back up, a source quipped “fear... No, make it greed.”

“It probably just got oversold as some investors rushed for the exits on Wednesday and Thursday,” he remarked.

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