Preferred stock market finishes week strong, though volume wanes; Fannie, Freddie down

By Stephanie N. Rotondo

Seattle, May 5 – Friday’s trading session started off mixed for the preferred stock market but ended strong once again, continuing a trend seen for most of the week.

The day’s gains came as a new jobs number topped expectations.

The Wells Fargo Hybrid and Preferred Securities index finished up 16 basis points. The U.S. iShares Preferred Stock ETF firmed 19 bps, though it was down 10 bps at mid-morning.

In April, 211,000 jobs were added, according to the latest Labor Department report. That resulted in the unemployment rate dipping to a 10-year low at 4.4%.

Wages meantime gained 0.3%, as was expected.

Still, the preferred market continued to see limited liquidity.

One trader noted that Fannie Mae had “strong earnings, so they’re jumping around a little bit.” The GSE posted a quarterly profit of $2.8 billion, which compared to the $2.2 billion profit peer Freddie Mac reported earlier in the week.

But as of mid-morning, the normally active issues weren’t all that busy.

What was busy was Ally Financial Inc.’s 8.125% series 2 fixed-to-floating rate trust preferred securities (NYSE: ALLYPrA), which closed up 3 cents to $25.59.

The Ally paper was a penny lower in early trading, at $25.55.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) dipped 18 cents, or 2.67%, to $6.56. Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) slipped a nickel to $6.26.

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