China and Rep. Coronavirus Relief

The already deteriorating relationship between the US and China took a massive hit after the White House ordered a Chinese consulate in Houston to shut down for alleged visa fraud and research data theft. David Stilwell, the US Assistant Secretary of State, claimed the closure was “long overdue” as he had been monitoring the facility but claimed fraud and theft escalated throughout the pandemic. We have not seen any significant swing in the market attributable to this; however, it is adding to the large tension between the two Superpowers.

Treasury Secretary Steven Mnuchin told CNBC this morning about the Republican proposed extension of the Coronavirus Relief Plan that will focus on jobs and getting kids back in school. The bill also contains plans for a 70% wage replacement for those who cannot return to work. Conservative leaders believe this will be enough income to live without disincentivizing any workers from returning to their job because they are making more through relief.

Stocks are down around 120 bps this morning after seeing a hump through the middle of the week. We expect quite a bit of volatility as earnings season ramps up.

Mortgage bonds are up this morning and making another run for their trading rang ceiling that we have talked about in the last few updates. Because breakouts are exceptions and not a rule, we will hold a locking bias as bonds flirt with this ceiling.