March Jobs Report Supports Improving Economy. Bond Yields Tick Higher But Are Still Attractive.
The March 2021 jobs report was massive with 916,000 new jobs created last month. Unemployment fell to 6%. Challenges remain as long-term unemployment remains elevated and is a top concern of Fed policymakers.
Bonds edged higher in light trading as the stock market was closed in observation of Good Friday. Bonds were also pressured this week by the announcement of a major infrastructure spending package. The plan has both pros and cons, and to date, both the bond and equity markets have responded well to the new plans to upgrade the United States which also includes corporate tax increases. As this plan makes its way through Congress, we do expect to see more volatility in the public markets expressing bond traders’ concerns about the size of the government’s balance sheet. Equity markets don’t like tax increases on corporate earnings nor the potential for higher interest rates.
The S&P 500 surpassed the 4,000 milestone and economic activity continues to improve as vaccinations take hold and life starts to return to normal. Air travel and hotel bookings are an upswing. Consumer confidence and business confidence also are improving.
Home sales remain strong but the overall housing market is under some pressure. Supply has been limited, and tat has driven up prices. Large traditional lenders remain very rigid in underwriting, but we’ve also seen the return of alternative loan programs including one-year tax return loans, W-2 only, and bank statement loans. Also in the mix now, CFDI programs are helping borrowers purchase or refinance debt. Rates remain attractive, fueling much activity. To help cool off speculation, Fannie Mae and Freddie Mac have added additional hits to disincentivize second home and investment home transactions to reinforce their focus on primary homeownership. The fallout of that benefits independent brokers like Insignia and our clients because we have access to lenders who are eager to lend to good borrowers at attractive rates who want to buy second homes and investment properties.
