Morning Commentary: Preferreds gain in subdued trading ahead of election; Fannie, Freddie firm

By Stephanie N. Rotondo

Seattle, Nov. 7 – Preferred stocks were trending better in early Monday trading after losing ground for most of the previous week.

“Everything is picking back up,” a trader said.

The Wells Fargo Hybrid and Preferred Securities index was up 39 basis points at mid-morning. However, it was up as much as 50 bps earlier in the session.

Despite the firmer tone, overall liquidity continued to be muted ahead of Tuesday’s presidential election.

“Everything is going to be quiet until Wednesday, assuming we have a clear winner,” a trader remarked. And while that trader opined that a clear winner would arise, he noted that there was “some worry about risk-off scenarios if Trump is elected.”

As for the day’s dealings, Fannie Mae and Freddie Mac were on the active side, and better, in the wake of the agencies’ earnings last week.

Both mortgage giants reported higher quarterly profits.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were up 4 cents at mid-morning, at $4.13. Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) were also better, adding 7 cents, or 1.73%, to trade at $4.12.

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