Preferred Recommended List: Recommended Lists for July

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Preferred Recommended List: Recommended Lists for July

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Preferred Recommended List

Recommended Lists for July

June’s high rates and hawkish Fed pressured preferreds… 01 July 2026

In June, broad market fixed-rate $25 par preferreds, as measured by the ICE BofA Core United States

Plus Fixed Rate Preferred Securities Index (P0P4), realized a -0.7% return (Exhibit 1), Preferred Strategy

continuing lower following May’s decline. The downward move reflects the trend in

interest rates, which remained near cycle highs for bulk of the month (US 10y north of Table of Contents

4.5%) as sticky inflation has weighed on yields, overpowering the tailwinds from Iran

About Our Preferred Recommended Lists 2

deal optimism (see the 17-Jun Global Energy Weekly). In fact, upward revisions to

inflation forecasts resulted in an especially hawkish June FOMC, in which the majority of Core $25 Par Fixed Rate Preferred Recommended 2

the policymakers projected rate hikes later this year (see the 17-Jun US Watch). This List

considered, our BofA economists now think the Fed will hike 75bps in 2026, beginning in Core $25 Par Fixed-to-Floating Rate Preferred 3

September—a function of both worsening inflation data and hawkish comments from Recommended List

new Fed Chair Kevin Warsh (see our economists’ 22-Jun Federal Reserve Watch note). $25 Par Floating-Rate Preferred Recommended 4

List

$1000 Par Fixed-to-Floating Rate Preferred…though less rates-sensitive fixed-to-floats outperformed 5

Unsurprisingly, more rates-sensitive, longer-duration pockets of the US preferreds Recommended List

market led the broader market’s move lower, topped by senior notes (-2.7%), foreign $1000 Par Fixed-to-Floating Rate Corporate Hybrid 6

names (-1.7%), and hybrids (-1.3%).