Morning Commentary: Veterans Day holiday weighs on liquidity, but preferred stocks remain firm

By Stephanie N. Rotondo

Phoenix, Nov. 11 – It was a quiet Veterans Day for the preferred stock market, according to one trader on Tuesday.

The stock market is open for the holiday, but the bond market is closed. Banks are also closed.

Still, he noted that despite the limited liquidity “things are up 5 to 6 cents.”

The Wells Fargo Hybrid and Preferred Securities index was up 3 basis points at mid-morning.

The trader also remarked that a recent report out of the Jerome Levy Forecasting Center could encourage investors to enter the preferred arena.

The analysis firm – named for the economist who predicted the crash of 1929 – said in its most recent monthly report that the chance of a recession in 2015 was around 65%. The report attributed that likelihood to a global economy that appears to be slowing, as well as across-the-board balance-sheet excesses.

If the prediction proves correct, that could give the market an indication of where interest rates will be, the trader said.

“It should keep rates low,” he said. “That could make preferreds attractive.”

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