Investment

Mortgage Market Update 4-6-20

Categories: Financial investmentPublished On: April 6th, 2020Comments Off9.4 min read

Betty Shih

Last Friday the March Jobs Report showed 701K jobs lost, far below expectations and just the first in what will be a string of historic job losses, and this huge number of job loss will continuing.

Just based on nearly 10 million unemployment claims in the last two weeks, the unemployment rate is already closer to 10%, rather than the report this morning. Some analysts even estimate unemployment will hit 32% before the economy can possibly turn the corner.

Stocks dropped again after the report release, even before the full extent of the economic devastation from the coronavirus pandemic was fully realized. The market kind of loss the confidence, so as the investors.

The Fed will be purchasing up to $40B in mortgage-backed securities in daily range and this will be continued till reach the estimate 6 Trillions.

The markets have expected bad news – but the numbers, at least so far, are coming in even worse than expected. The uncertainty around the human toll and the depth and duration of the economic impact from the virus remains the driver. Until we see clarity on the virus and coming out on the other side, we can only speculate on the economic impact.

What we do know is the Fed and the Administration have already committed $6T to help the economy through this time and talk of a new Phase 4 to include infrastructure is gaining steam. Couple this financial support with a strong human spirit and we see the U.S. economy picking up significantly by the 4th quarter.

Mortgage Bonds closed with gains last friday with some signs of stabilization occurring as the Fed tries to ‘thread the needle’ by buying mortgage bonds to provide liquidity. The 10-yr yield settled at low level as 0.58%.