Market Commentary 11/6/20

In what was an action-packed week, equities enjoyed a boost higher and bond yields dipped lower. The markets seem to respond positively to political gridlock, with the presidency and the House going to the Democrats versus a Republican Senate. As of this writing, the election outcomes are still not 100% confirmed.

While the country (and the world) fixated on the outcome of the presidential elections, a respectable October jobs report escaped major notice. The economy continues to rebound from the Covid-19 induced shutdowns. At the same time, the pace of job gains is slowing, which rings a few potential alarm bells. Hopefully, once the presidential election is in the rearview mirror, Congress can come together and provide a stimulus bill to keep companies and individuals afloat during what we predict will be a challenging autumn and winter season. Social distancing will continue to affect travel, entertainment, restaurants, gyms, schools, offices, business districts, and so on, for the foreseeable future. Widespread availability and adoption of an approved vaccine is the resolution we’re waiting for and that’s still a way off.

Housing on the other hand remains on a tear. The combination of low interest rates and high demand has kept lenders very busy. Low rates have been a boon to both corporations and individuals who have been able to use cheap funding to either purchase new assets or refinance existing ones. The biggest benefactor of these low-interest rates has been asset-light equities and the high-end housing market.

Our suite of lenders remains very motivated to make responsible loans to our borrowers but is also sympathetic to the fact that the 2nd quarter of 2020 was very rough on many businesses. With housing values holding steady and many self-employed borrowers making adjustments to their businesses, loans are getting approved and deals continue to close. 

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