Morning Report: The Fed is not even thinking about increasing rates

Vital Statistics:

S&P futures391512.3
Oil (WTI)58.14-0.34
10 year government bond yield 1.14%
30 year fixed rate mortgage 2.85%

Stocks are flattish this morning as earnings continue to come in. Bonds and MBS are flat.

Initial Jobless Claims fell to 739k last week. It looks like the layoffs are starting to ease up, but we are still pretty elevated compared to historical norms.

The FHFA extended its foreclosure moratorium until the end of March. In addition, loans backed by Fan or Fred are eligible for a foreclosure extension for up to three months, and can defer payments for up to 15 months. “To keep families in their home during the pandemic, FHFA is allowing borrowers to be in COVID-19 forbearance for up to 15 months and extending the Enterprises’ foreclosure and eviction extension,” said FHFA Director Mark Calabria.

Fed Chairman Jerome Powell signaled that easy monetary policies will be in place for a while. The Fed is probably not going to “even think about withdrawing policy support” for the foreseeable future. He also said that monetary policy alone will be insufficient to get the economy going again and it will require fiscal stimulus and efforts from the private sector. “It will require a society-wide commitment, with contributions from across government and the private sector” What “contributions from the private sector” means is anyone’s guess. Here are the prepared remarks from his speech.

Mortgage delinquencies fell by 92 basis points in the fourth quarter to 6.73%, according to the MBA. This is an increase of 296 basis points compared to the fourth quarter of 2019. “For the second consecutive quarter, homeowners’ ability to make their mortgage payments improved,” said Marina Walsh, CMB, MBA Vice President of Industry Analysis. “The 92-basis-point drop in the delinquency rate in the fourth quarter was the biggest quarterly decline in the history of MBA’s survey dating back to 1979. Total mortgage delinquencies across the three loan types – conventional, FHA and VA – and across the major stages of delinquency – 30-day, 60-day and 90-day – declined from last year’s third quarter.”


Author: Brent Nyitray

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

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