Overview: The novel coronavirus continued to be the focus of investors over the past week. Federal Reserve (Fed) bond purchases have helped reduce daily volatility in mortgage markets, and rates again ended the week with little change.
On Thursday, the Fed announced that it will make available another $2.3 trillion of financing to businesses and local governments. The initial $2 trillion fiscal stimulus relief package was aimed mostly at individuals and small businesses. These new Fed programs will increase the amount of aid available to midsize companies and municipalities. In his press conference following the announcement, Fed Chair Jerome Powell said that the Fed will act "forcefully, proactively, and aggressively" to do everything it can to "provide as much relief and stability" as possible during the crisis.
While the economic data released over the past week reflected the unprecedented impact of the coronavirus, it came in relatively close to expected levels. Most notably, following a decline of 0.4% last month, March retail sales plunged 8.7% from February, compared to the consensus forecast for a decrease of 8.0%. Since consumer spending accounts for about 70% of all economic activity in the U.S., this data provided another closely watched indication of current conditions.
Similarly, industrial production in March fell 5.4% from February, compared to the consensus forecasts for a decline of 4.0%. Filings for new jobless claims dropped from 6.9 million last week to 6.6 million this week, but were still more than the consensus forecast of 5.0 million. Economists were much further off the mark with their estimates for the housing index from the National Association of Home Builders (NAHB). In April, this index showed that homebuilder confidence sunk from 72 to 30, far below the consensus of 55.
Retail Sales (% change)
April 16 — Unemployment Insurance Weekly Claims report
April 16 — New Residential Construction report (aka Housing Starts)
April 21 — Existing Home Sales report