Morning Report: Stocks up on vaccine news

Vital Statistics:

 

  Last Change
S&P futures 3646 145.6
Oil (WTI) 41.07 4.01
10 year government bond yield   0.92%
30 year fixed rate mortgage   2.83%

Stocks are higher this morning after Pfizer and BioNTech announced that its COVID-19 vaccine was successful in its Phase 3 trial. Bonds and MBS are down on the “risk-on” trade

 

Here is the press release from Pfizer about 2 hours ago. The vaccine supposedly has an efficacy rate of 90%. The vaccine has received fast track approval from the FDA.

 

While the election results may not have pleased partisans on either side, they are an absolute win for the markets and the mortgage banking business. Markets generally prefer gridlock since it means certainty. For interest rates, notwithstanding the market reaction to vaccine news, they should remain lower for longer with the Fed holding down rates and little chance for a big stimulus package. The best part of Biden (market friendliness, etc) will stay in place while the bad parts: tax hikes, green new deal, etc will not. Note we won’t have a final word on the Senate until January when the Georgia run-offs will determine the final make-up.

 

Note that divided government means that the big broke blue states like New York might go into default. The state and NYC bonds were downgraded already last month.

 

For stock investors, the promise of a vaccine means we should see some signs of life in lodging, airlines, and retailers. Interesting that the retailers rose 8% last week. Cruise line stocks are up 20% pre-market.

 

What the CFPB will look like under a Biden administration. Biden is almost assured to replace current director Kathy Kraninger as one of the first orders of business. Democrat Katie Porter is one name that has been mentioned. The CFPB will probably focus more on COVID related servicing issues at least initially.

 

 

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