Midday Commentary: Debt-ceiling deal hopes boost preferreds; Citigroup remains active, softens

By Stephanie N. Rotondo

Phoenix, Oct. 10 - Preferred stocks were seeing "a little bit of a bounce with the equity market," a trader said Thursday.

The move up came on hopes the government would work out a debt-ceiling deal before the Oct. 17 deadline. However, a budget deal is yet to come, meaning the government will remained partially shuttered.

Still, the hopes helped the market regain the ground it lost Wednesday and then some.

At midday, the Wells Fargo Hybrid and Preferred Securities Index was up 25 basis points. The index had closed down 20 bps on Wednesday.

Citigroup Inc.'s 7.125% series J fixed-to-floating rate noncumulative preferreds (NYSE: CPJ) remained very busy, with over 500,000 shares trading by lunchtime. The preferreds were off 3 cents at $25.55.

Also active were US Bancorp's 6% series G fixed-to-floating rate noncumulative perpetual preferreds (NYSE: USBPN). That issue was trading at $27.12, up 11 cents as of midday.

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