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Morning Commentary: Jobs data offers little clarity on rates; Fannie Mae, Freddie Mac eyed
By Christine Van Dusen
Atlanta, Sept. 4 – Fannie Mae and Freddie Mac preferred stock remained in focus on an otherwise quiet Friday as investors considered the latest release of economic data from the United States.
The economy added 173,000 new jobs during August, the smallest bump since March, while the unemployment rate dipped to its lowest level seen in seven years.
“The jobs numbers were a little disappointing, so we've seen stocks sell off, and bonds are up a half-point,” a trader said. “But for the most part, nothing is really moving in our world. I think people were hoping to get a stronger jobs number, to get definition on whether we'll see a hike next week.”
Meanwhile, Fannie Mae and Freddie Mac got some attention on Friday morning, following the previous week’s news of a potential settlement between shareholders and the federal government. A Wall Street Journal story later cast doubt on a settlement.
The mortgage giants have had the bulk of their profits conscripted by the federal government under amended terms of a conservatorship agreement since 2013.
Profit-taking led to a number of shareholder lawsuits, most of which allege the government acted illegally in taking most of the agencies’ quarterly earnings.
By Friday, Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were trading at $4.98, slightly higher than Thursday’s $4.95. Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferred stock (OTCBB: FMCKJ) traded Friday morning at $4.88, flat to Thursday’s close.
In other trading, Goodrich Petroleum Corp.’s 10% series C cumulative redeemable preferreds (NYSE: GDPPC) – which earlier in the weak took a beating after cutting its dividend payments – opened Friday at $2.0601, down from Thursday’s $2.7487. The 9.75% series D cumulative redeemable preferreds (NYSE: GDPPD) moved to $1.79 on Friday morning, from Thursday's $1.94.
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