Initial jobless claims hit 885K in the latest week, another unexpected rise and the fourth time they’ve arrived above forecasts in five weeks. Estimated monthly tax and insurance advance on active forbearance plans were $1. 3B, up from $1. 2B in the previous week.
The 50-day just crossed above the 100-day at the start of the month, But they have been bouncing around the same level since the start of last month. For the week ended Dec. 15, Black Knight said active mortgages in forbearance increased W/W, following the trend of mid-month upticks, but probably will fall in early January as 550K forbearance plans are set to expire. In a November survey by the New York Fed, consumers expect to increase spending in the year ahead even as they expect flat income and earnings growth. Overall, the average 2020 application rate of 39. 8% compared with the 2019 average of 45. 8%. The New York Fed’s latest Survey of Consumer Expectations Credit Access Survey underscores the stark impact of the pandemic on credit demand, credit access, and expectations relating to both for the coming year. All major regions either took a step back or held steady in terms of their respective M/M status, but each of the four areas experienced significant Y/Y growth.
The Fed deciding not to extend WAM indicates comfort with the current direction of the economy. But the FOMC, which would have the latest labor market figures, keeping its asset-purchasing program unchanged should give investors some assurance.
provides some hope in the gloomy mid-winter ahead of the new year, with demand growth set at 11% Y/Y, to 15. 3M units for 2021, although Brexit risks remain. The forecast assumes that effective vaccines will be widely available by mid-2021, although full availability is not expected until sometime in 2022. SA contributor Jim Sloan says emerging markets value and small cap stocks are the cheapest asset class and due for reversal. “To enhance yield in core fixed income, we think investors should consider slightly extending duration, and rely on active management in mortgage-backed securities and portions of the investment grade corporate market. ”
Mansion Global estimates home prices to rise 5% in 2021 driven by robust activity in the U. S. housing market. He further believes that generational factors, lifestyle choices and workplace flexibility should bring more sellers into the market and 2021 could be one for the record books. Other than home sales, November records reflected averages across 52 U. S. markets with median sales prices of $292K (+13. 8% Y/Y), months supply of inventory totaled 1. 8, barely higher than the report’s record low of 1. 7 set in August. But the type of inflation being priced in is healthy from the Fed’s point of view, such as the economy growing as vaccines are administered, Cabana notes. Bond yields are edging up today, indicating the market’s comfort with the employment data. With the real 10-year yield at -1. 03%, the 10-year breakeven of 1. 96 is at levels not seen since May 2019.
Estimated monthly principal and insurance advances on active forbearance plans were $3. 4B, up from $3. 3B last week. More than 550K plans are set to expire at the end of December, which could result in a substantial decline in forbearances in the first week of January. The number of active mortgages in forbearance rose by 37K in the week ended Dec. 15 in what has become a trend of mid-month upticks, according to the Black Knight’s McDash Flash Forbearance Tracker. Passenger car BEV volumes across China, Europe and the U. S. are expected to reach 2. 45M in 2021, or ~5. 4%, representing an increase of 1. 7% over 2020. China remains a leading market for electrification with its dual-credit policy; current IHS Markit forecasts predict BEV share of ~14. 6%, representing nearly 3. 2M passenger vehicles in China by 2025. In the European market, battery electric vehicle sales have been significantly boosted by regulatory requirements; October BEV sales share rose to ~7%.
Industrial real estate — warehouses and logistics centers, in particular — have increased in value as investors buy infrastructure key to ecommerce and essential businesses. As the pandemic spread in 2020, thousands of U. S. stores, restaurants, and gyms closed temporarily or permanently, hotel rooms went unused, and office workers stayed at home. That put pressure on landlords to stay current on mortgages with many tenants unable to make rent. But the Fed’s inaction on its bond-buying program last week indicates a central bank comfortable with the employment picture for the time being. The advance number of actual initial claims under state programs, unadjusted, totaled 869. 4K, an decrease of 72. 5K (or 7. 7%) from the previous week. Seasonally adjusted estimate of new houses for sale at the end of Oct was 286K, representing the supply of 4. one months at the present sale rate, flat through a 3. 3-month source at the end associated with October.
Investors looking for value may consider the financial and healthcare sector since they are trading at low relative valuations. The major averages finished the week higher in anticipation of a stimulus deal. The deal includes $600 in stimulus checks, jobless benefits of $300 per week and more small-business funding for the Paycheck Protection Program.