May 19, 2020 - Market Update

Originations were strong as dealers were reporting north of $3B in supply.  The Federal Reserve bought $2.97B in UMBS 2.0-3.0s and an additional $1.575B in GNMA 2.5-3.5s.  They will be conducting another operation tomorrow at 10am for UMBS-15yr followed by an 11:30 operation in UMBS 2.0s-3.0s. 

The S&P rallied 90.21, or 3.15%, to 2953.91 on optimism surrounding a vaccine for Covid-19.  Moderna Inc has tested a vaccine that has yielded some positive results around creating an immune-system response.  Travel and event stocks rallied the most on the news.  In prepared remarks for the Senate Banking Committee, Federal Reserve Chairman Jerome Powell said the Central Bank is “committed to using our full range of tools to support the economy”.  He also noted that interest rates are to remain suppressed until the economy is on track to restore employment and stabilize prices.  Powell is scheduled to appear on a virtual hearing in front of the committee today at 10am with U.S. Treasury Secretary, Steven Mnuchin. 

In a proposed merger that regulators must prevent, Uber Technologies is trying to acquire Grubhub for $6B. Grubhub competes directly with Uber subsidiary Uber Eats. The combined firm would control slightly more than half of the third-party meal delivery business. Both sides talk of synergies, and improved platforms and logistics.