Economic update for the week ending June 27, 2020

Stocks drop on Coronavirus fears – As Coronavirus cases increased dramatically in 31 states, investors sold off stocks, and all indexes dropped sharply. Many governors and mayors announced a pullback in the speed of reopening. A couple of towns even went back to a shelter in place order. A pullback in reopening will stall the economy further, and slow the pace of workers returning to work.  The Dow Jones Industrial Average closed the week at 25,015.55, down 3.3%  from 25,871.46 last week. It’s down 12.3% year to date. The S&P 500 closed the week at 3,009.05, down 2.9% from 3,097.74 last week. It’s down 6.9% year to date. The NASDAQ closed the week at 9,757.22, down 1.9% from 9,946.12 last week. It’s up8.7%year to date. 

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 0.64%, down from 0.71% last week. The 30-year treasury bond yield ended the week at 1.37%, down from 1.45% last week.

Mortgage rates – The Freddie Mac Primary Mortgage Survey released on June 25, 2020, reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate average was 3.13%, unchanged from 3.13% last week. The 15-year fixed was 2.59%, unchanged from 2.58% last week. The 5-year ARM was 3.08% unchanged  from 3.09% last week. 

California Pending Home Sales – Leslie Appleton Young the chief economist and VP of The California Association of Realtors announced that pending sales increased 67% in May from April’s pending sales figures. Pending sales are new contracts signed and reported to MLS systems. They take on average 30-60 days to close. May’s existing home sales marked a historic low number, down over 41% from the number of homes sold last May. Fortunately, judging by the number of pending sales, and the escrow cancellation rate,  June and July’s existing sales numbers will be significantly higher, and much closer to last years figures. 


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