July 29, 2020 - Market Update

Stocks – Stocks opened higher as investors anticipate the conclusion of the Federal Reserve meeting and a congressional hearing before the House Antitrust Subcommittee later today. On Tuesday, the Fed announced it would extend emergency lending programs by three months to encourage activity during the pandemic. Chairman Powell is set to give a press conference following the central bank’s decision at 2 p.m. Chief executives of Amazon, Apple, Facebook, and Google are set to appear before the House Antitrust Subcommittee today as it investigates the market dominance of online platforms.

Treasury – Bonds pricing is slightly improved and treasury yields are mixed ahead of the Fed’s interest rate decision later today. The 10-year U.S. Treasury is currently yielding 0.574%. MBA mortgage applications fell 0.8% last week, with purchase and refinance activity both decreasing from the prior week. The average 30 fixed rate was 3.2%. Fueled by lower rates, pending home sales, a measure of previously owned home sales, increased 16.6% in June, slightly ahead of expectations. The Fed is widely expected to reinforce loose monetary policy today in an effort to combat increasing recent surges in coronavirus cases that have put a damper on economic recovery.

MBS – Fannie 30 Years closed up a few ticks relative to 10 Year Treasury performance. Lower Fannie coupons closed 4-5 ticks up, while higher coupons had a mixed performance. Lower Ginnie coupons also had a better performance than the Treasury, and they closed up 3-6 ticks. Ginnie 3s and higher tracked the Treasury for the most part. The lower and more liquid of the Fannie 15 Year coupons saw a 2-3 tick improvement, relative to the 5 Year Treasury. Trading activity continued at the same pace with $219 billion exchanging, including $19 billion in Specified Pools.