April 27, 2020 - Market Update

Treasuries ended the day little-changed as demand remained consistent. Friday closed with the 10yr yield flat at 0.60% and the 2yr yield slightly up (+0.01) at 0.22%.

Mortgages had a strong start to the day with early outperformance but began to fade relative to treasuries in the afternoon. The last Fed auction of the day was oversubscribed to the point that it hurt performance. Not long afterwards, this week’s Fed Ops schedule was released, with the maximum daily MBS purchases declining to roughly $8 billion.

On Friday, US equities received some upward momentum to close the day higher. While all 3 major indices were up from Thursday’s close, each remains in negative territory for the week after evidence surfaced of COVID-19-inflicted blows to the economy. Friday’s performance indicates that the market is showing a bit of resilience in hopes that the impact will equate to a short-term phase rather than a drawn-out downturn. Investors are ultimately weighing what the true extent of the damage will look like.

On one hand, US orders for durable goods posted a 14.4% decline in March, US crude futures saw their worst week on record, and corporate earnings early in the week lacked promise. On the other hand, Friday saw President Trump sign a $484B spending bill funneling more financial aid to small businesses and hospitals, WTI crude futures for June rebounded to $16.94 per barrel, and positive earnings sparked optimism in tech companies. As it stands, analysts expect consumer and industrial activity to rebound as lockdowns subside, but the extent and timing of the rebound remains up in the air. At the close, the DJIA was up +260.01 to 23,775.27, the Nasdaq rose +139.77 to 8,634.52, and the S&P 500 ended higher +38.94 at 2,836.74.

America’s most popular sandwich is grilled cheese, with 79% of respondents liking or somewhat liking it. Next, in a fowl tie, is the turkey sandwich and the grilled chicken sandwich at 75%. Roast beef follows at 71% then comes the pork parade with both the ham sandwich and BLT at 69%, club at 68% and the bacon sandwich at 67%. The PB&J follows at 66%.

Market Levels (May):