Rate Focus: Jobs, Stimulus And Coronavirus Developmet

  • March 26, 2020
Rate Focus: Jobs, Stimulus And Coronavirus Developmet



Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up.


Mortgage rates are moving slightly lower at the moment.  The MBS market worsened by -9 bps yesterday. This may’ve caused rates or fees to move sideways for the day.  We saw extreme rate volatility again yesterday.


Jobs: Initial Weekly Jobless Claims jumped by 3.283 million vs. estimates in the 1 to 4 million range. It’s the biggest jump on record. The BLS said that nearly every state reported the COVID-19 as the reason.

GDP: We got our third look at the 4th QTR GDP, and it remained at 2.1%. Of course, this data is now too old to have any bearing on current market conditions.

Central Bank: The Bank of England kept its key interest rate at 0.1%. They had previously cut that from 0.75% at an emergency meeting. They took no action at this regularly scheduled meeting. The European Central Bank started purchasing bonds under its new emergency QE facility, and so far, it is helping both Spanish and Italian bond yields.

Stimulus? After the big “wiff” yesterday, the Senate has passed a $2T bill by a vote of 96-0, the House says it will vote on it on Friday.

Coronavirus: The following are the key headlines that are grabbing the attention of bond traders this morning:

  • US Cases 70,000 and deaths above 1,000
  • Global reported deaths at 21,571 (Chinese data viewed as false in those numbers, add a cool million to that at least).
  • Italy is still surging with another new round of 2,500 cases in 24 hours, Italian Mayor threatens to send police with “flamethrowers” to graduation parties that are banned.
  • NY Police Department reports 200 new COVID-19 cases among police officers.
  • New York City hospitals report “apocalyptic” surge in cases.
  • Surge in cases in NO, experts warn its the next NY.
  • Moscow has shut down


Once again today, we’re seeing extreme market and rate volatility. While the jobless levels were at record-breaking levels and are tragic, to say the least, the markets were not caught by surprise. Look for rate markets to continue to show severe volatility while they digest the unemployment news, stimulus details, and coronavirus developments.


If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Source: TBWS

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