Q: Why is this preferred share index trading at 52 wk lows ? I believe interest rates are nearing their peak and when the numbers begin to show the recession spreading though out the economy ( rising unemployment etc.), feds may begin to ease.
5i Research Answer:
Prefs have been strange traders over the last few years, certainly. The current weakness might be a relative attractiveness issue, with savings accounts paying something in the 3% range, investors likely need a higher yield (and in turn lower pref prices) to justify owning the asset class. Since prefs do have some correlation to equities, a recession scenario might not be overly favourable to these either. While we would not be particualrly concerned with preferreds in general, they might be in a bit of a tough spot in the short to medium term.