Preferred stocks slide as CBO predicts slightly higher deficit; RBS fined, shares firm

By Stephanie N. Rotondo

Phoenix, Aug. 27 – Preferred stocks were “pretty much flat right now,” a trader said early Wednesday.

However, the Wells Fargo Hybrid and Preferred Securities index ended the day down 10 basis points after being down as much as 20 bps earlier in the session.

“[The index] has had a huge run up; it could just be taking a breather,” a trader said.

The index could also be reacting to a new deficit report put out by the Congressional Budget Office, which showed that while the deficit fell for the fiscal year ending in September, the latest projections are slightly higher than before due to lower-than-expected corporate tax revenues.

As for volume, it continued to be lackluster leading up to the Labor Day holiday. Aside from “a bunch of things going ex-dividend,” a trader said that “it’s going to be dead the rest of this week.”

Still, he was optimistic that a new deal could come early next week.

Meanwhile, Royal Bank of Scotland Group plc got slapped with a hefty fine from the Financial Conduct Authority in regards to poor advice given to mortgage customers, as was expected.

The £14.5 million penalty was below the £15 million expected, but either way, the fine is not expected to have much impact on the bank’s bottom line.

On the news, the preferreds were mostly up, though the most liquidly traded issues were down on the day.

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