Fannie Mae, Freddie Mac jump on Mnuchin remarks; energy preferreds up on OPEC agreement

By Stephanie N. Rotondo

Seattle, Nov. 30 – Preferred stocks were selling off in the final trading day of the month, though “not tremendously,” a trader said.

He called “everything down 15 cents to 30 cents on $25-pars,” which he added was about in line with where Treasuries were performing.

The Wells Fargo Hybrid and Preferred Securities index closed down 66 basis points.

“It was obviously a rough day in the market, unless you owned GSE preferreds,” a market source said.

Bucking the downward trend, Fannie Mae and Freddie Mac preferreds were “through the roof because of what Mnuchin said,” a trader remarked.

The trader was referring to Steven Mnuchin, the president-elect’s apparent pick for Treasury Secretary, who said that the GSEs should not be owned by the government.

“It was pretty clear,” the trader said of the comments.

The GSEs’ preferreds have been steadily climbing upward since the election of Donald Trump, on hopes that his administration would address GSE reform. Until Mnuchin’s comments, however, Trump’s campaign had not specifically addressed the matter.

In midweek trading, the Fannie and Freddie securities were up as much as 50%, making the preferreds the day’s biggest percentage gainers.

Also gaining ground were oil and gas-linked preferreds, as OPEC agreed to limit production for the first time since 2008.

Domestic crude prices traded up 8.27% on the day.

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