28 April 2020

1) The economic woes of the coronavirus may not be over yet. Forecast are that the U.S. economy later this year could contract at a faster rate than for the Great Depression, with a 30% contraction of the second quarter. Durable goods have plunged 14.4% in March as the economy came to a near halt, while the unemployment rate for the same time rose 4.4%. The number of people losing jobs in the last five weeks is 26.4 million, which has wiped out all the job gains made after the Great Recession.

2) Oil continues its troubles, sliding down in price with fears of it reaching zero again. There remains a critical shortage of storage for bulk oil, so there’s no place to put new oil pumped up, and that drives the price of futures down. Oil prices plunged nearly 25% at the start of the week amid fears of limited storage. Global energy demand has fallen drastically from the pandemic shutting factories and putting limits on travel around the world, leaving a glut of oil. With the world economy down, there isn’t any light at the end of the tunnel, and therefore not much hope that the oil glut will ease significantly in the foreseeable future.

3) Fannie Mae and Freddie Mac have announced that borrowers who skip mortgage payments (called forbearance status) due to the coronavirus pandemic won’t have to make lump-sum repayments when the crisis is over. The administration is encouraging other mortgage lenders to adopt similar policies to avoid undue stress to the people and economy during a recovery. Almost 6% of borrowers have delayed making mortgage payments as of April 12, up from 3.7% a week earlier. It’s still not clear just when or how forbearance status will be granted to a borrower, thus allowing the deferment of payments to a later date.

4) Stock market closings for – 27 APR 20:

Dow 24,133.78 up 358.51
Nasdaq 8,730.16 up 95.64
S&P 500 2,878.48 up 41.74

10 Year Yield: up at 0.66%

Oil: down at $12.93

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