Morning Commentary: Preferred stocks remain strong for the year; rates, bank earnings on the radar

By Stephanie N. Rotondo

Seattle, Jan. 5 – The preferred stock market continued to see strength in early Thursday dealings.

The Wells Fargo Hybrid and Preferred Securities index was up 27 basis points at mid-morning.

While preferreds have been strong since the new year started, liquidity has been on the lighter side. That trend also continued into Thursday trading.

One thing weighing on trading volumes was interest rates, or rather, where rates will be over the next few years.

“Everyone is trying to determine where interest rates will be over the next two years,” a trader said.

Another question on investors’ minds was how regulations will or will not change for banks. If the incoming administration holds its promise to roll back certain regulations that have been put in place since the financial crisis, banks might not need to raise additional capital.

Those questions may be addressed – at least partially – next week when bank earnings season begins.

Of the day’s active names, Morgan Stanley & Co. Inc.’s 6.375% series I fixed-to-floating rate noncumulative preferreds (NYSE: MSPrI) were up a dime at $26.1043. Wells Fargo & Co.’s 5.5% series X class A noncumulative preferreds (NYSE: WFCPrX) were also better, rising 6 cents to $23.77.

However, Capital One Financial Corp.’s 6% series H noncumulative preferreds (NYSE: COFPrH) were off 3 cents at $25.06.

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