For the week of June 8, 2020

"It takes only half as much time to do a thing when it should be done as will be required a week later."—E,W, Howe, American novelist, newspaper and magazine editor

Freddie Mac’s chief economist asserts, “all signs continue to point to a solid recovery in home sales activity heading into the summer as prospective buyers jump back into the market.”

In fact, the Mortgage Bankers Association reports purchase applications rose for the seventh week in a row, spiking 18% over last year, citing “pent-up demand from homebuyers returning to the market.”

Realtor.com’s chief economist chimes in, “we expect to see a shortened, but strong summer home-selling season, as long as seller confidence continues to improve,” noting “the momentum the market had prior to the pandemic has helped.”

INVESTOR WALLETS REOPEN TOO... As the economy slowly reopened, investors reopened their wallets. Following the buying spree, the three major market indexes posted sharp gains for the week and month.

Uncertainty over Sino-U.S. relations arose after China tightened its grip on Hong Kong. The U.S. responded with strong measures, but investors were happy the President brought up neither tariffs nor the Phase One trade deal.

Personal Income spiked 10.5% in April, boosted by the CARES Act stimulus checks and extra jobless benefits. The personal savings rate rocketed to a record 33.0%, and that money could certainly help speed the recovery.

The week ended with the Dow UP 3.8%, to 25,383; the S&P 500 UP 3.0%, to 3,044; and the Nasdaq UP 3.4%, to 9,490.

There were enough China worries to lift bond prices. The UMBS 3.5% ended UP 0.11, to $105.50. . In Freddie Mac's weekly Primary Mortgage Market Survey, the national average 30-year fixed mortgage rate barely edged up. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?... Open houses have been on pause, but a new survey by the National Association of Realtors found 65% of those who attended an open house in the last year would do so now without hesitation.

INFLATION MUTE, BUT WHAT WILL THE FED SAY?... The CPI (Consumer Price Index) and the wholesale PPI (Producer Price Index) should show inflation stays quiet. But all ears will be listening to the Fed’s take on the economy after it meets Wednesday on the FOMC Rate Decision, expected to be a non-event.

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.

Forecasting Federal Reserve policy changes in coming months... Fed watchers feel we're a long way away from seeing economic data strong enough to spur a rate hike. Note: In the lower chart, a 3% probability of change is a 97% certainty the rate will stay the same.

Current Fed Funds Rate: 0%-0.25%

Probability of change from current policy:

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