April 15, 2020 - Market Update

Yesterday’s new origination flows totaled just over $7.5B for the session bringing the 5-day average to $5.6B.  The Fed continued to support liquidity and supplemented the demand side of the equation.  For the day the Fed purchased $15.2B of MBS ($11.3B FN / $3.9B GN). 

In terms of economic releases, the MBA’s weekly mortgage application index was already released this morning.  The release showed that overall mortgage applications rose 7.3% last week following the -17.9% drop the previous week.  Purchase applications fell 1.8% last week while refi applications rose by 10.1%.  Refis represented 76.2 of the week’s overall activity.

This morning, treasuries are trading higher across the curve as oil prices fall below $20 per barrel and global equity markets slide.  Currently, the 2yr is +0.75/32 (0.209) and the 10yr is +18+/32 (0.692). 

In Fed Chairman Jay Powell’s press conference last week he put down several critical markers. First, rates are low and will stay low for a long time! Second, the Fed will make purchases as large as necessary to keep markets functioning! Third, he delicately implored the administration to have a thoughtful plan prior to re-opening the economy for business, to best avoid a Covid-19 reoccurrence.