Sector Update

September 8, 2020

This week’s Sector Update is abbreviated due to the holiday-shortened week.

Treasury yields flattened last week with shorter yields rising and longer yields falling. Yields were down for the week through Thursday until the jobless rate declined Friday from 10.2% down to 8.4% (9.8% was expected). The 2-10 spread closed 2 bps lower at 57 bps. Stocks (gauged by S&P 500 Index) broke a 5-week stretch of higher closes and finished down 2.3%. Tech stocks were particularly hard hit and that trend continues into this morning with all three major U.S. indices in negative territory. Yields have also continued to move in a flattening fashion this morning with longer yields down more than their shorter counterparts.

In a Friday afternoon NPR interview, Fed Chair Powell said in regards to a question about interest rates being around zero for years, “We think that the economy’s going to need low interest rates, which support economic activity for an extended period of time, and – it will be measured in years, yes, we believe. However long it takes, we’re going to be there. We’re not going to prematurely withdraw the support that we think the economy needs.” A link to the full interview can be found below.

This Morning

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 (August) | Monthly, 5th business day

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


NPR: Transcript: NPR’s Full Interview With Fed Chairman Jerome Powell

“Today’s jobs report, unemployment rate declined to 8.4%. More than a million jobs were created. Again, that’s not as many as were created in May and June, but that’s because more and more people are going back to work. So I guess I would just say the recovery is continuing. We do think it will get harder from here — because of those areas of the economy that are so directly affected by the pandemic still.”

WSJ: U.S. Government-Bond Yields Fall As Investors Seek Safety

“Tuesday’s move marks a reversal after a run-up in Treasury yields that preceded the holiday weekend. The 10-year yield notched its largest one-day increase since May in the wake of Friday’s better-than-expected jobs data.”

Vining Sparks: Coronavirus Chartbooks

PDF/Mobile: Coronavirus Chartbook (PDF)

Regulatory Links

Federal Reserve: 8/27 Announces approval of updates to its Statement on Longer-Run Goals and Monetary Policy Strategy

Fannie Mae: 8/27 Updated Eight Lender Letters

Fannie Mae: 8/27 Suspension of Foreclosures and Evictions on Single-Family Mortgages Through Year-End

FDIC: 8/26 Agencies Issue Three Final Rules (CBLR, CECL, and Eligible Retained Income)

FDIC: 8/25 Quarterly Banking Profile Released (2Q 2020)

FHFA: 8/25 Adverse Market Refinance Fee Implementation now December 1

FDIC: 8/20 Webinar: Loan Forgiveness and Other Relative PPP Matters (FIL-77-2020)

Federal Reserve: 8/19 Minutes of the Federal Open Market Committee, July 28-29, 2020

SBA: 8/13 SBA Announces New Reduced 504 Loan Debenture Rates

Fannie Mae: 8/12 Lender Letter LL-2020-12 – New Adverse Market Refinance Fee

Federal Reserve: 8/11 Federal Reserve announces revised pricing for its Municipal Liquidity Facility

Federal Reserve: 8/10 Individual large bank capital requirements, effective October 1

OCC: 8/7 OCC Reduces September 2020 Assessments in Response to COVID-19

Federal Reserve: 8/6 Details of new 24x7x365 interbank settlement service to support instant payments

FHFA: 8/6 Multi-Fam Prop. Owners in Forbearance Required to Inform of Eviction Suspension and Tenant Protections

FDIC: 8/3 Additional Loan Accommodations Related to COVID-19 Event (FIL-74-2020)

LIBOR Transition Links

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 7/8: ARRC Releases a Tool to Help Firms Move Internal Systems and Processes away from LIBOR

ARRC 6/30: Further Details Regarding Its Recommendation of Spread Adjustments for Cash Products

ARRC 6/30: Recommended Fallback Language for Private Student Loans

ARRC 6/30: Updated Recommended Hardwired Fallback Language for Syndicated Loans

ARRC 6/5: ARRC Welcomes CFPB’s Updated Consumer Handbook and Proposed Rule Facilitating Transition Away from LIBOR

ARRC 5/28: ARRC Welcomes FNMA and FHLMC’s LIBOR Transition Playbook

ARRC 5/27: ARRC Announces Best Practices for Completing Transition From LIBOR

ARRC 4/17: ARRC Announces Its Key Objectives for 2020

ARRC: 4/8:  ARRC Announces Recommendation of a Spread Adjustment Methodology for Cash Products

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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