Morning Report: COVID costs NYC $1.2 billion

Vital Statistics:

 LastChange
S&P futures37185.3
Oil (WTI)48.770.34
10 year government bond yield 0.93%
30 year fixed rate mortgage 2.78%

Stocks are flattish as investors hope for some sort of stimulus package. Bonds and MBS are down.

Congress is working on stimulus bill and also a stopgap measure to keep the government funded. There is a tiny possibility that funding could run out over the weekend, but nothing prolonged is envisioned.

Despite the increase in the 10 year bond yield, mortgage rates are at record lows. “Mortgage rate dynamics over the past several months have been less dependent on economic data and more on policy-related matters — both fiscal and monetary — as well as epidemiological developments,” said Matthew Speakman, a Zillow economist. “A new spending package may place some upward pressure on mortgage rates, particularly if the package contains more than has been reportedly debated. Investors have expected the spending package for a while now, meaning it’s likely that most of their reaction has already been priced in. Overall, mortgage rates remain very low and are unlikely to shift unless a blockbuster spending package is passed before the end of the year.”

Falling real estate prices have dented NYC revenues by 1.2 billion. Sales of commercial and resi properties have fallen 49% compared to last year. This has translated into a 42% decrease in tax revenue for the City. The next shoe to drop should be office vacancies as big financial firms like JP Morgan and Goldman have talked about moving more jobs out of the City. Manhattan apartment prices are at 10 year lows, apparently. I have to imaging the apartments in more marginal areas of Brooklyn and Queens are getting absolutely hammered.

Author: Brent Nyitray

In the physical sciences, knowledge is cumulative. In the financial markets, it is cyclical

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