| |
|
Still Focused on Coronavirus
|
|
With Super Tuesday and the key monthly Employment report on the schedule, investors long ago anticipated that this would be a big week. Of course, no one could have foreseen that these events would be almost completely overlooked due to the outbreak of the coronavirus. Once again, this was nearly the sole focus of investors, and rates reached record low levels.
|
|
The reason that the coronavirus has been positive for mortgage rates is still the same. Quite simply, it has slowed global economic activity and reduced the outlook for future inflation, which is favorable for bonds, including mortgage-backed securities (MBS). The high level of uncertainty about the eventual magnitude of its effects also causes investors to prefer relatively safer assets such as bonds over riskier assets such as stocks.
|
|
Nearly across the board, recent economic data has shown that the US economy was performing very well prior to the outbreak of the coronavirus, and Friday's important labor market report was a prime example. Against a consensus forecast of 175,000, the economy gained a massive 273,000 jobs in February, and revisions added another 85,000 jobs to the results for prior months. Average job gains have been an enormous 243,000 over the past three months.
|
|
|
The unemployment rate unexpectedly declined from 3.6% to 3.5%. Average hourly earnings, an indicator of wage growth, were 3.0% higher than a year ago, matching expectations. Of course, the reports released so far have not been significantly impacted by the coronavirus. The critical question is how much it will affect future economic activity.
|
|
Looking ahead, the coronavirus will remain the main focus for investors. Beyond that, the Consumer Price Index (CPI) will come out on Wednesday. CPI is a widely followed monthly inflation report that looks at the price change for goods and services. The next European Central Bank (ECB) meeting will take place on Thursday, and investors expect the ECB to follow the lead of other global central banks by announcing additional stimulus measures. In addition, news about the US elections could have an influence.
|
|
| Weekly Change |
| 10yr Treasury |
fell |
0.40 |
| Dow |
rose |
100 |
| NASDAQ |
fell |
25 |
|
|
| Calendar |
| Wed |
3/11 |
CPI |
| Thu |
3/12 |
ECB Meeting |
| Fri |
3/13 |
Consumer Sentiment |
|
|
|
All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline) and may not be reproduced without permission.
|
|
| |
| |
