In Review: Week of March 30th, 2020. March did not go quietly “out like a lamb” this year, with the impact of the COVID-19 pandemic evident in key labor sector reports. The Bureau of Labor Statistics reported 701,000 job losses in March, much worse than expectations, while the ADP report showed 27,000 job losses. Unfortunately, the latest Initial Jobless Claims filings broke another record, almost doubling the record figures from the previous week.
GDP is also feeling the impact. While the early estimates were for first quarter to be down by 6%, this has been revised to -9%. Meanwhile, second quarter GDP is expected to be down 34%. This is shocking and clearly spells a recession this year.
Also of note, the CARES Act is providing help for homeowners struggling with their mortgage payments. While this is great news, it’s important to understand key differences between mortgage forbearance and mortgage forgiveness, as explained below.
The Fed continues its asset purchase program, which includes purchases of Mortgage Backed Securities. Last week, the Fed bought enough MBS for market stability, but not too much, which is a positive development that can hopefully prevent problems for lenders, including margin calls.
