The stock market opened higher this morning after a solid 1.7% gain last week. Higher prices this morning are likely attributable to the start of earning seasons where investors expect company leaders to focus on aggressive plans to recover from the economic shutdown. While the shutdown was detrimental to many, it opened many new market opportunities for some and forced others to create new revenue sources. A factor that many economist site for the explanation of how the market has held with lower projected earnings is the massive push toward passive investing. The Financial Times found that over 90% or millennial money in equities is invested passively and Bloomberg estimates that money in passive funds will pass active money in funds this month.
We touched on the increase in home purchases seen by Realtors last week. This weekend, John Burns Real Estate Consulting reported a 55% increase in new home builds from the prior year. This was the largest year over year gain since 2010 – post Great Recession. While this is good news for the market, it pushed the prices of new builds up for consumers.
There are no scheduled economic reports today, but we will report tomorrow after the release of the Consumer Price Index (CPI).
Mortgage backed securities are slightly down today from Friday. They are now in the middle of a trading range with room to move on both sides. Because of this, we are holding a locking bias.