Morning Commentary: Primary preferred space remains silent; Fannie, Freddie bounce back

By Stephanie N. Rotondo

Phoenix, Oct. 9 – It continued to be subdued in the preferred stock market Thursday, even following a new jobs number that showed jobless claims falling to an eight-year low on average.

“It’s been a very boring week,” a trader said. “A lot of stuff went ex-dividend, but there’s just nothing [going on].”

The Wells Fargo Hybrid and Preferred Securities index was down 1 basis point at mid-morning. The index closed Wednesday up 26 bps.

As has been the case all week, no new issues were announced Thursday morning.

Even activity in Fannie Mae and Freddie Mac preferreds seemed to be leveling out, even as the agencies’ paper was “bouncing back a little bit,” according to a trader.

The trader said the upward moves came on the heels of reports indicating that it doesn’t matter who wins the next presidential election – neither side wants the government to act as a mortgage insurer, meaning a wind-down of some sort is still likely in the cards.

However, it could take several more years to iron that out.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were up a nickel, or 1.49%, in early trading at $3.40. Freddie’s fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) were up 6 cents, or 1.70%, to $3.42.

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