May 20, 2020 - Market Update

Originations continue to be strong as dealers are reporting north of $5B in originations.  The Federal reserve continues to support the mortgage market with QE4 purchases.  Mortgages were well supported in 2.0-3.0s, where the fed is conducting their operations. 

Yesterday optimism was short lived for the Covid-19 vaccine tested by Moderna.  The vaccines’ study did not provide enough critical data to prove a success.  Much of Monday’s equity rally spurred by the potential vaccine was erased in the last hour of trading in Tuesday’s session.  The S&P fell by 1.05% to 2922.94 to end the session.  Trading volatility will remain high as people “buy the rumor and sell the news”.  Oil futures gained for the 4^th day in a row and seem a world away since the oil flash crash. 

April housing starts came in at 891,000, down 29.7% Y-o-Y and a level last consistently seen in 2013, but through April starts are up 3.7% YTD. Starts will probably be down Y-o-Y for the next four or five months but low inventories and forbearance limit supply, while favorable Millennial demographics and low interest rates boost demand. Lastly, job losses from Covid-19 have hit lower-income workers hardest.