"Anyone who does not believe in miracles is not a realist."--David Ben-Gurion, first Prime Minister of Israel
Visit CDC.gov for the latest reliable information on COVID-19. Click here for a micro-course on how to help you and your loved ones stay safe during this unprecedented health crisis.
NATIONAL MARKET UPDATE
While we wait for our miracle, the index of contracts signed on existing homes, Pending Home Sales, rose 2.4% in February, up now two months in a row. This bodes well for existing home sales closing in March and April.
The National Association of Realtors chief economist says the spring buying peak will be delayed, not canceled: "people who are staying home right now, once the all-clear signal is given, will be going back into the market."
Freddie Mac's chief economist noted, "homebuyer demand has declined in response to current economic conditions," but "stimulus is on the way and will provide support for both consumers and businesses."
REVIEW OF LAST WEEK
LOSSES BEAT GAINS... Investors had some good days, but the bad days were bigger, sending the three major indexes off for the week as we face a once booming economy now slowed by measures to contain the coronavirus.
With non-essential businesses closed in most of the country, and travel severely diminished, another 6.6 million people filed for unemployment, plus, with the drop in hiring, there was a 701,000 decline in Nonfarm Payrolls in March.
More evidence of a dramatically slowing economy came as the ISM Manufacturing Index fell back into contraction territory, although the ISM measure of the much larger services sector stayed over 50, still showing growth.
The week ended with the Dow down 2.7%, to 21,053; the S&P 500 down 2.1%, to 2,489 and the Nasdaq down 1.7%, to 7,373.
Safe-haven interest, falling stocks, and economic worries drove bonds north. The UMBS 4.0% ended UP .96, to $106.80. For two weeks in a row, the national average 30-year fixed mortgage rate fell in Freddie Mac's Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
DID YOU KNOW?... In addition to Fannie Mae and Freddie Mac, the FHA and VA are now easing standards for property appraisals and verification of employment on some loans. Please contact us for specifics.
THIS WEEK'S FORECAST
INFLATION OK, JOBLESS CLAIMS RISE, FED MINUTES REVEALED... The Producer Price Index (Core PPI) of wholesale prices should dip, while the Consumer Price Index (CPI) should rise a tad. Weekly Initial Unemployment Claims are expected to come in big, no surprise, given the number of businesses closed by CORVID-19. FOMC Minutes from the Fed's emergency meet could be interesting. Stay tuned.
Bond markets will close at 2 p.m. on Maundy Thursday. All financial markets will be closed on Good Friday.
NOTE: Weaker economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and higher loan rates.
FEDERAL RESERVE WATCH
Forecasting Federal Reserve policy changes in coming months... Literally no one sees the Fed raising rates any time soon. Note: In the lower chart, a 0% probability of change is a 100% certainty the rate will stay the same.
Current Fed Funds Rate: 0%-0.25%
AFTER FOMC MEETING ON:
Probability of change from current policy:
AFTER FOMC MEETING ON:
BUSINESS TIP OF THE WEEK
Working from home, watch your electric bill. Electronics in standby mode still sap power, so unplug PCs, laptops, printers, etc., when not in use. Only use LED bulbs. Put all food and drink in one fridge and unplug other fridges, freezers, wine coolers. Clean dryer vent to keep dust out of the air conditioning.