July 23, 2020 - Market Update

Stocks – Stocks opened lower after an unexpected increase in jobless claims for the first time since March. New unemployment claims reached 1.4 million for the week ending July 18 as several states impose new restrictions on businesses to curb rising coronavirus cases. Infections in the U.S. have climbed past 3.9 million with a reported 142,000 deaths. The prospect of a fifth coronavirus relief package is more optimistic as Senate Republicans resolve outstanding issues and are set for negotiations with Democrats to reach an agreement before enhanced unemployment benefits expire at the end of the month.

Treasury – Bond Prices are mixed this morning with treasury yields decreasing slightly. The 10-year U.S. Treasury is currently yielding 0.576%. Jobless claims data showed U.S. jobless claims rose more than expected last week. Weekly claims came in at 1.416 million, marking 18 straight weeks in which initial claims totaled more than 1 million. Continuing claims dropped to roughly 16.2 million, slightly better than anticipated. Investors are still weighing optimism over a new coronavirus response bill which could potentially help amidst a weakening economic outlook.

MBS – Fannie coupons tracked the 10 Year Treasury’s movement yesterday. The 2 coupon saw the strongest improvement with a 2-tick gain. Ginnie coupons were mixed as Ginnie 2s saw a 1 tick improvement while higher coupons, aside from the Ginnie 4s, lagged 1-3 ticks. Fannie 15s also tracked the 5 Year Treasury closely. Trading slowed with $193 billion exchanging, including $23 billion in Specified Pools.