Good Morning on this best day of the week, Wednesday,

Oil is up 20% day over day, taking stocks with it. The Dow is up 400+ and the 10-yr Treasury is now at .63%. Mortgage Bonds are, for the time, sitting this one out as they should. They did not get much of the improvement for the past week as Treasury yields dropped, so they are not getting hurt today as the pendulum temporarily swings. Other than some news headlines, nothing has changed. In my opinion, equity markets are still overvalued. 40% of oil demand comes from autos and trucks and travel. Um, when do we see that demand coming back? Retail is faltering (clothing sales were down 50% last month, what do we think April will look like?). Netflix is doing great, as are other tech companies. That’s the new normal. Bonds will stay range-bound for a long moment.

The best news today is that FHFA (overseer of Fannie and Freddie) is coming to its senses. The industry has asked for a lifeline for servicers to provide liquidity so that they can maintain an orderly mortgage market (when borrowers go into forbearance, the servicer stops receiving payment but is still required to pay the investors that actually own the loans… the forbearance options now extend for up to a year. That cash crunch is potentially disastrous). FHFA had and is continuing to push back and offer no lifeline. They did, however, today make two critical adjustments. 1) they provided a stopgap for servicers saying they would only require servicers to advance four payments to investors on loans in forbearance and then take over from there (at what cost to the public, we don’t yet know, and that is for another time). 2) they are allowing loans in forbearance to be eligible. This is exceptional news for the industry and could/should lead to lower rates (that is until volume picks up and rates rise to slow it down).

That’s it.. please stay safe and be healthy. Make today great!