June 12, 2020 - Market Update

Mortgage origination volume came in at $8.77B, higher than the five-day average of $8.19B.

In yesterday’s Federal Reserve MBS Purchase Operations, the Fed purchased, $720M FNCL 2.0%, $1.756B FNCL 2.5%, and $474M FNCL 3.0%.  In Agency 15-year, the Fed purchased $1.122B FNCI 2.0%, and $453M FNCI 2.5%.  Federal Reserve MBS purchase operations scheduled for today include 30-year Ginnie Mae MBS 2.5% and 3.0%, totaling $1.5744B, and 30-year Uniform MBS 2.0-3.0%, totaling $2.977B.

US treasuries rallied for the fourth straight day in a bull flattener, driving the 10-year treasury yield to the lowest level since…last Monday, at 0.67%.  

The US equity markets’ wild ride turned into a slide yesterday, as renewed concerns about the health of the economy — and the literal health of workers amid rising COVID-19 cases – sent markets tumbling to the largest single day decline since March 16.  The surging number of new coronavirus cases in states that reopened sent jittery investors to risk-off trades, with the Dow Jones Industrial Average Index down -1,861.82 points (down -6.9%) at 25128.17. The S&P 500 Index fell -188.04 points (down -5.89%) to 3002.10, while the Nasdaq Composite Index crossed 10k again, but this time on the way down, to close at 9492.73 (down -527.62 points,  -5.27%).  Houston, TX emerged as the most recent COVID-19 hot spot – “We may be approaching the precipice of a disaster,” one county executive stated — with city officials preparing to reopen a temporary hospital at a football stadium as cases continued to mount.

The official May unemployment rate was 13.3%, down from 14.7% in April. However, classification errors systematically lowered unemployment rates in March through May. After accounting for these errors, which the Census Bureau fully disclosed, the true unemployment rate in April was 19.7%, in May it fell to 16.3%. The broadest measure of unemployment fell from 22.8% in April to 21.2% in May; it peaked at 17.2% during the Great Recession.