Morning Commentary: Preferred stocks slide as CBO predicts slightly higher deficit

By Stephanie N. Rotondo

Phoenix, Aug. 27 – Preferred stocks were “pretty much flat right now,” a trader said early Wednesday.

However, the Wells Fargo Hybrid and Preferred Securities index was down 19 basis points at mid-morning, after being up as the trading session began.

“[The index] has had a huge run up; it could just be taking a breather,” a trader said.

The index could also be reacting to a new deficit report put out by the Congressional Budget Office, which showed that while the deficit fell for the fiscal year ending in September, the latest projections are slightly higher than before due to lower-than-expected corporate tax revenues.

As for volume, it continued to be lackluster leading up to the Labor Day holiday. Aside from “a bunch of things going ex-dividend,” a trader said that “it’s going to be dead the rest of this week.”

Still, he was optimistic that a new deal could come as soon as early next week.

The market will be closed Monday for the holiday. It will reopen on Tuesday.

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