Investment

Mortgage Market Update 5-11-20

Categories: Real Estate + LendingPublished On: May 11th, 2020Comments Off11.8 min read

Betty Shih

The Bureau of Labor statistics just reported the worst Non-Farm Payrolls report in U.S. history for April. Non-Farm Payrolls showed 20.5 million Americans lost their jobs last month while the Unemployment Rate soared to 14.7% with losses seen across all sectors of the labor market. The U6 number, or total unemployed soared to 22.8% – meaning that literally 1 in 5 people are without a job and want one.

The market response – Stocks and bond yields are higher. As we have been saying during the last week as the bad economic numbers continue to pour in, markets are forward-looking and optimistic the economy will re-open and the worst of the virus cases is behind us. The next couple of weeks will be very telling. We are looking to see and hear stories about a decline in unemployment in sates reopening and a decline in coronavirus cases.

Stocks are also getting a bounce on headlines that read the U.S. – China trade tensions are easing after President Trump threatened China with new tariffs last week. Mortgage Bonds are flat while Treasury prices decline under the weight of higher stock prices. The 10-year yield has inched higher to .66%. The Fed will be purchasing up to $6.16 in mortgage-backed securities today. There are just two operations at 10:00 a.m. ET – 10:20 and 11:30 – 11:50. The FNMA 30-yr 2.5%, 3% and 3.5% coupons will see the bulk of the buying with $3.96B at the 11:30 slot.

Coronavirus update from Johns Hopkins as of this morning: Here in the U.S., there are 1,256,972 cases of the virus with 75,670 total deaths while 195,036 have recovered. There are 3,866,642 cases of the virus reported worldwide, 270,118 deaths while 1,293,333 have recovered from the virus.

We are not expecting rates to climb too high and the Fed will see to that. But at the same time, the incoming $3T supply and growing is putting pressure on rates and needs to be watched closely. With the Jobs Report behind us, you can float brand new clients into the weekend and attempt to buy some time. However, as always, consider locking when you can as we may have seen the bottom in rates … at least for now.

The next two weeks are pretty important and so is .60% on the 10-year Note.