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Posted by sarahebordelon on March 23, 2020
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FOR THE WEEK OF MARCH 23, 2020

 

NATIONAL MARKET UPDATE

Entering the economy’s coronavirus contraction, February Housing Starts showed strength, off 1.5% after January’s large upward revision, but up 39.2% from a year ago, at a 1.599 million annual rate.

Single-family starts shot up 6.7% at the fastest pace since 2007, and single-family permits hit a post-recession high. Builder confidence was positive, but expect declines soon, followed by a big rebound after coronavirus issues get resolved. 

Existing Home Sales grew 6.5% in February, to 5.770 million annually, the highest level in 13 years, but these contracts were signed before coronavirus. Once the emergency passes, low inventories will still be a challenge.

 


 

REVIEW OF LAST WEEK

WORST WEEK SINCE 2008… By the end of a very bumpy five days of trading, the three major stock market indexes were off big time, marking their worst week since the 2008 financial crisis. But now the driver is a health crisis.

The volatile selloff persisted as the number of coronavirus cases continued to grow and no one can say when the growth curve will start to reverse. Social distancing measures should flatten the curve but contract the economy.   

Companies curtailing operations will shrink incomes and jobs. But Congress passed $8.3 billion of worker relief, is looking at $1.2 trillion of economic stimulus, the President waived student loan interest, and taxes aren’t due until July 15.

The week ended with the Dow down 17.3%, to 19,174; the S&P 500 down 15.0%, to 2,305 and the Nasdaq down 12.6%, to 6,880.

Even safe-haven bonds sold off, suggesting investors were opting for cash. The UMBS 4.0% ended down 1.11, to $103.39. Freddie Mac’s Primary Mortgage Market Survey saw the national average 30-year fixed mortgage up again “to help manage refinancing demand.” Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?… 2019 saw more than 2 million first-time home buyers for the third year in a row, the first time that’s happened since 1993. First-timers bought 38% of the single-family homes sold and took out 56% of all mortgages.

 


 

FEDERAL RESERVE WATCH

Forecasting Federal Reserve policy changes in coming months… Fed bankers canceled their March 17-18 confab after they dropped the rate to near zero March 15. Wall Street believes they’ll keep it there. Note: In the lower chart, a 0% probability of change is a 100% certainty the rate will stay the same.

Current Fed Funds Rate: 0%-0.25%

AFTER FOMC MEETING ON: CONSENSUS
Apr 29 0.00%-0.25%
Jun 10 0.00%-0.25%
Jul 29 0.00%-0.25%

 

Probability of change from current policy:

AFTER FOMC MEETING ON: CONSENSUS
Apr 29     0%
Jun 10     0%
Jul 29     0%

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