Morning Commentary: Preferreds firm on limited trading as holiday looms; Yellen speech on tap

By Stephanie N. Rotondo

Seattle, May 27 – Preferred stocks were attempting to end the week with a firmer tone, even as liquidity was dampened due to the impending three-day Memorial Day weekend.

“I don’t think anything is going to happen today,” a trader said.

The trader further opined that even a speech from Janet Yellen, Federal Reserve chairman, later in the day would not keep players around.

“By the time she’s speaking, half the people will already be driving out to the Hamptons or Michigan, or wherever you go,” he said. He added that the believed the talk would be a “non-event.

“Unless she is incredibly hawkish,” he added.

Yellen is scheduled for a sit-down with Harvard economics professor Greg Mankiw at 1:15 p.m. ET. Market watchers are hoping the Fed head will give further clues as to whether a rate hike is coming sooner than later – especially after the Commerce Department upwardly revised first-quarter GDP.

Last week, minutes from the last policy meeting of the central bank indicated that an interest rate increase was in the cards for June or July, assuming the economy continued to improve.

As for preferred dealings, DTE Energy Co.’s $300 million offering of 5.375% 25-par 2016 series B junior subordinated debentures due June 1, 2076 were seen at $24.90 bid.

That issue came Monday via BofA Merrill Lynch, UBS Securities LLC and Wells Fargo Securities LLC.

From Tuesday’s business, Hersha Hospitality Trust’s $175 million of 6.5% series D cumulative redeemable preferreds were pegged at $24.80 bid.

A trader said the issue was trading under a temporary symbol, “HRHPP.”

Morgan Stanley, BofA, Raymond James & Associates Inc., Wells Fargo and Citigroup Global Markets Inc. ran that deal.

Gabelli Utility Trust’s $50 million of 5.375% series C cumulative preferreds – a deal priced Wednesday – also had a temporary ticker, “GABUP,” according to the trader.

That issue was trading around par at mid-morning.

Morgan Stanley ran the books.

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