Unemployment Skyrockets

Unemployment Skyrockets

Good afternoon everybody!

 

Unfortunate news for the United States this morning – there was the highest number of workers who filed for unemployment last week since the initial spike in March. Claims rose 181k from the previous measurement to a total of 965k. Fed Chairman Powell explained that the US is on a long road to full employment and ensured the country that the stimulus coming from the central bank will continue for the foreseeable future. This mass amount of layoffs happened at the same time as many cities were shut down due to record COVID numbers and the annual post-holidays layoffs began. Diane Swonk, the Chief Economist at Grant Thornton, warned, “What we’re seeing in unemployment claims is a reminder that we’re likely to lose more jobs before we get to the end of this crisis”.

 

Mortgage backed securities continue to fall today but there are some technical signs that could signal a turnaround – at least in the short term. MBS were able to climb back on top of their 200 dma – signaling upward potential however, president elect Biden will be proposing a stimulus package this afternoon which has potential to cause volatility in the bond market. Due to the potential volatility, we are holding a locking bias unless you closely watch the market.