Market Commentary 10/30/20

Equities sold off hard this week, even against the backdrop of a strong bounce-back 3rd quarter GDP reading, better-than-expected consumer spending, and strong earnings from tech giants such as Microsoft and Google. Increased global Covid-19 cases and the fear of shutdowns in Europe were partly to blame, as well as a failure by Congress to pass a stimulus bill. Next week looks to be a wild week in the markets with the looming U.S presidential election, Fed statements, and the October jobs report. Any of these factors, just by itself, can move the markets in a big way. 

Interest rates continued to move higher but still remain at attractive levels.  Given the tremendous volatility in equities, it may be construed as a good sign that bond yields did not plummet. Perhaps (and hopefully), bond traders are expecting some inflation, more government stimulus, and a return to some normalcy within the next year or so. Interest rates going to zero is generally a negative indicator, so we are mildly encouraged by rates moving up a bit.  

Home sales remain strong with existing home sales blowing past estimates. Home supply is tight, spurred on by high demand from people wanting a home or a home in a less urban area amidst viral threats. All things home related have been a big boost to the U.S. economy. Low-interest rates have incentivized refinance and purchase money transactions. Volume continues to be heavy and high-quality properties tend to receive multiple offers. Even though we’ve been seeing an uptick in business, we have an efficient process in place to help all new clients.

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