July 31, 2020 - Market Update

Stocks – Stocks edged higher following positive results from the largest tech companies’ quarterly earnings reports. Shares in Apple, Facebook and Amazon were up pre-market as reports indicate that the three companies posted better than expected sales during the last three months. Concerns over the next coronavirus relief package were highlighted as Congressional leaders did not agree to terms Thursday night just before federal jobless benefits expired Friday. Cases of the coronavirus in the U.S. have climbed back above 70,000 as the daily reported number of deaths hit its highest level in more than a month.

Treasury – Bond pricing continues to improve and treasury yields inch lower as short-maturity rates reach record lows this morning. The 10-year U.S. Treasury is currently yielding 0.558%. Consumer spending rose 5.6% in June against declining personal incomes of roughly 1.1% as recent stimulus measures wash out of the economy. Recent surges in coronavirus cases continue to add pressure to economic metrics and a persistently weak jobs market as the economy struggles to rebound.

MBS – Fannie 30 Year coupons tracked the 10 Year rally yesterday. Ginnie 2s saw the largest divergence from the 10 Year’s movement with a 5 tick lag in relative performance. The rest of the Ginnie coupons stayed pretty tight to the benchmark. Fannie 15 year coupons also remained coupled with the 5 Year. Lower 15 Year coupons posted slight gains and higher coupons lagged a bit. Trading activity maintained its recent volume with $238 billion exchanging, including $16 billion in Specified Pools.