Morning Commentary: Preferreds move up, liquidity slips; Fannie, Freddie climbing up again

By Stephanie N. Rotondo

Phoenix, Oct. 13 – Preferred stocks were inching up in early trading, albeit amid subdued activity.

While the equity markets were open on Monday, the fixed-income space was closed for Columbus Day. As a result, many preferred stock players were taking advantage of the three-day weekend.

The Wells Fargo Hybrid and Preferred Securities Index was up 2 basis points at mid-morning.

Fannie Mae and Freddie Mac preferred shares continued to regain ground despite the overall quiet tone of the day. The preferreds had started to climb back up on Friday, as Fairholme Funds said it had officially filed an appeal against a Sept. 30 decision that dismissed investors’ lawsuits regarding the government’s takeover of a majority of the agencies’ profits.

U.S. federal judge Royce Lamberth was responsible for the decision, which said that the government did not do anything illegal by consigning the profits.

In trading Monday, Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) traded up a nickel, or 1.25%, to $4.05 and Freddie’s fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) gained 15 cents, or 3.8%, to $4.10.

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