Midday Commentary: Preferreds stay strong; First Republic holding steady above par; RBS gets hit

By Stephanie N. Rotondo

Phoenix, Oct. 23 - Preferred stocks continued to firm up in midweek trading, but a trader said that overall, the market was still a bit subdued.

"Everybody just seems to be sitting on their hands," he said.

Still, he noted that the bond market was "doing well," with the 10-year Treasuries trading at levels not seen for about six months. He also pointed to chatter that the Federal Reserve could increase its quantitative easing program instead of tapering it, given recent jobs figures.

"If that happens, we could see people rushing back in looking for yield," he said.

As of midday, the Wells Fargo Hybrid and Preferred Securities index was up 4 basis points.

In recent deals, First Republic Bank's $200 million of 7% series E noncumulative perpetual preferreds were holding in at $25.05 bid, $25.10 offered.

The deal came Monday.

In the secondary, Royal Bank of Scotland Group plc's preferreds remained under pressure. The securities have been falling off dramatically all week due to a news article late last week regarding the U.K. government's pending decision about how to deal with the bank's bad assets.

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