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Economic update for the week ending December 26, 2029

Economic update for the week ending December 26, 2029

Stocks almost unchanged for the week – Stock markets had a lackluster week as President Trump would not sign off on a stimulus package that everyone felt would be a done deal after it was approved by the house and senate on Monday. The package, most of which is expected to be approved included the following:

1  Direct immediate relief for individuals   – payments of $600 per individual will be sent to people making under $75,000 and married, filing jointly, taxpayers over $150,000. There will also be $600 for each dependent for these individuals. For example a married couple making under $150,000 with two children will receive  $2,400 ($600 x 4 people). This was the part of the bill objected to by the President. He felt that the $600 payment  should be increased to $2,000. The Democratic’s are in agreement to increase the amount. The Republicans feel it adds too much debt. We shall see how negotiations go this week.

Unemployment assistance – People unemployed or self-employed that have lost income due to the pandemic will receive $300 per week federal unemployment benefits for up to 50 weeks. This ends March 31, 2021 in California. That is in addition to any state benefits, which only employees receive.

Relief for businesses – There is $284 billion set aside for a new round of PPP loans. This will allow qualified businesses to receive a second PPP loan for up to $2 million. These businesses mush have less than 300 employees and must have used all of their first PPP loan funds. (Which were capped at 10 weeks of payroll). They must be able to demonstrate at least a 25% loss of income for any quarter in 2020 compared to 2019. The loans can be used for personal protective equipment (which was not permitted in the first round), as well as payroll, rent, and mortgage payments for businesses that own their locations.

Evection moratorium – Currently the CDC federal eviction moratorium ends December 31, 2020. It’s extended to January 31, 2021. California already extended their eviction moratorium until January 31, 2021.

Rental assistance – The bill provides for $25 billion which will be administered by state and local governments to distribute for rental assistance.  Landlords can apply directly for these funds to offset lost rent. We will get you more information on this when it’s available. It is not a sufficient amount of funds to cover rent lost, so we will await how it will be distributed.

The Dow Jones Industrial Average closed the week at 30,199.87, up 0.1% from 30,179.05 last week. It’s up 5.8% year-to-date.  The S&P 500 closed the week at 3,703.06, down 0.2% from 3,709.41 last week. It is up 14.6% year-to-date. The NASDAQ closed the week at 12,804.73, up 0.4% from 12,755.64 last week. It’s up 33.62% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 0.94%, almost unchanged from 0.95%  last week. The 30-year treasury bond yield ended the week at 1.66%, down from 1.70%  last week. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates – The December 17, 2020, Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate was 2.66%, almost unchanged from 2.67% last week. The 15-year fixed was 2.19%, down from 2.21% last week. The 5-year ARM was 2.79%, unchanged from 2.79% last week.

I hope you had a great holiday weekend!

Matthew Paul