Preferred stocks see negative tone; Fannie, Freddie improve; Wells Fargo loses early gains

By Stephanie N. Rotondo

Seattle, July 24 – The preferred stock market started the new week off with a weaker tone on Monday.

“We did better than Treasuries, that’s for sure,” one market source noted, as long Treasuries waned about half a point.

“So the curve steepened,” he said.

The Wells Fargo Hybrid and Preferred Securities index was off 18 basis points. The U.S. iShares Preferred Stock ETF declined 5 bps.

Liquidity continued to be subdued, aside from Fannie Mae and Freddie Mac’s preferreds, both of which saw trading of over 1 million shares.

A source said the activity – and the upward trajectory – was “rather curious.”

He noted that there was a New York Times article over the weekend, which came with the headline “U.S. foresaw better return in seizing Fannie and Freddie profits.”

The source added that there was nothing new in the article that hasn’t been said before – thus his confusion as to why the paper was doing so well.

Elsewhere in the secondary, Wells Fargo & Co.’s 5.625% class A series Y noncumulative preferreds (NYSE: WFCPrY) were initially up, but closed off 3 cents at $25.74.

There was no fresh news out on the San Francisco-based bank, though it was reported on Friday that it had potentially gotten itself in hot water yet again by releasing sensitive client information to a former employee.

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