Sector Update

November 23, 2020

For the third Monday in a row, news of a vaccine is hitting the headlines. Today, it is Oxford-AstraZeneca, as the headlines announce a vaccine with an average 70% efficacy rate. If you read a little deeper though, it’s interesting that two-full doses produced a 62% rate while a half-dose followed by a full-dose produced a 90% efficacy rate. Market reactions are more muted this morning compared to prior weeks. Like last week, I think this is likely due to continued growth in infections – especially considering the Thanksgiving holiday this week. Market volatility surrounding these types of events, along with not knowing who will control the Senate, the potential for further Fannie/Freddie reform prior to the start of a Biden administration, and of course unknowns could make for a volatile year-end.

This Morning

It’s been interesting to watch the divergence between the Dow/S&P 500 and the tech heavy NASDAQ as of late. For example, last week, the Dow/S&P 500 were down 0.7% and 0.8% respectively while the NASDAQ squeaked out a 0.2% gain. This morning, with the newest vaccine announced, the tables are flipped. Treasury yields are higher on maturities greater than 3-years and the curve is steeper by 2 bps.

Sector Commentary

What We’re Reading

Market Today | Daily

Weekly Recap | Weekly, Friday

Brokered Deposit Rate Indications | Weekly, Monday

Investment Alternatives Matrix | Weekly, Tuesday

MBS Prepay Commentary (November) | Monthly, 5th business day

SBA Prepay Commentary (November) | Monthly, 10th business day

WSJ: Fannie, Freddie Overseer Looks to End Federal Control Before Trump Leaves

“Completing the complex process before President Trump’s term ends on Jan. 20 is a long shot, and President-elect Joe Biden is considered unlikely to continue the effort. But Messrs. Calabria and Mnuchin could succeed in taking steps that would be difficult to reverse, such as significantly restructuring the government’s stakes in the firms.”

CNBC: Oxford-AstraZeneca Covid vaccine shows an average 70% effectiveness in preventing the virus

“One dosing regimen showed an effectiveness of 90% when trial participants received a half dose, followed by a full dose at least one month apart. The other showed 62% efficacy when given as two full doses at least one month apart.”

Vining Sparks: Coronavirus Chartbooks

PDF/Mobile: Coronavirus Chartbook (PDF)

Regulatory Links

FHFA: 11/18 FHFA Announces Final Capital Rule for the Enterprises

FHFA: 11/13 FHFA Further Extends COVID-Related Loan Flexibilities

FDIC: 11/6 Interagency Statement LIBOR Transition for Loans (FIL-104-20)

Federal Reserve: 11/5 Federal Reserve issues FOMC statement

Federal Reserve: 10/30 Federal Reserve Board adjusts terms of Main Street Lending Program

Fannie Mae: 10/30 Fannie Mae Issues Inaugural Multifamily and Single-Family SOFR ARM MBS

FDIC: 10/29 Agencies Propose Regulation on the Role of Supervisory Guidance

FHFA: 10/20 Temporary Policy Allowing Purchase of Qualified Loans in Forbearance Extended

FDIC: 10/20 Temporary Relief from Part 363 Audit and Reporting Requirements (FIL-99-20)

FDIC: 10/20 Net Stable Funding Ratio (FIL-98-20)

LIBOR Transition Links

ARRC 10/15: FAQs — Updated 10/15/2020

ARRC 9/30: August – September ARRC Newsletter

ARRC 8/27: Recommended Hardwired Fallback Language for Bilateral Business Loans

ARRC 8/18: Transition Resource Guide for ARM and Private Student Loans

ARRC 8/7: ARRC Releases the SOFR Starter Kit

ARRC: Link to all ARRC Announcements

ARRC: Link to all ARRC Publications

ARRC: Link to ARRC Fallback Contract Language

Fannie Mae: LIBOR Transition Webpage

Freddie Mac: LIBOR Transition Webpage

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