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Morning Commentary: Preferreds open firm; decent bank earnings do little to move markets
By Stephanie N. Rotondo
Seattle, July 18 – Preferred stocks were trying to recoup Monday’s modest losses in early dealings on Tuesday.
The Wells Fargo Hybrid and Preferred Securities index was up 3 basis points, after ending off 7 bps previously. The U.S. iShares Preferred Stock ETF was up 7 bps.
The ETF ended Monday’s session down 3 bps.
More bank earnings came out Tuesday, with both Bank of America Corp. and Goldman Sachs Group Inc. reporting results that beat expectations.
For its part, Goldman topped expectations despite a 40% decline in fixed-income trading revenue. BofA posted a 14% decline in fixed-income trading revenue.
But as has been the case recently, the earnings reports did little to move the preferred market.
“We may see something next week, but this week is a snoozer,” a trader said.
The trader also noted that political stagnation was also to blame.
“With Trump not getting anything done, the dollar is dropping and Treasuries are moving higher,” the trader remarked.
In early dealings, Wells Fargo & Co.’s 6.625% series R fixed-to-floating rate noncumulative preferreds (NYSE: WFCPrR) were on the more active side, slipping a nickel to $30.25.
Two Harbors Investment Corp.’s $250 million of 7.625% series B fixed-to-floating rate cumulative redeemable preferreds were also on the weaker side, losing 4 cents to trade at $25.35 at mid-morning.
The deal came July 12 via Morgan Stanley & Co. LLC, UBS Securities LLC, J.P. Morgan Securities LLC and Keefe Bruyette & Woods Inc. The deal was upsized from $75 million and priced tighter than the 7.75% initial price talk.
The issue trades under a temporary symbol, “TWHBP.”
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