The unemployment rate in the United States is at its highest level since World War II. According to the Bureau of Labor Statistics' jobs report out Friday morning, the unemployment rate skyrocketed to 14.7% with 20.5 million jobs lost in April. That last time we had double-digit unemployment was 1982 when we hit 10%. 

It is hard to see any positive through that report. However, the stock market does see this report as a sign that maybe we are past the worst part of this economic downturn. The numbers from the BLS were not as bad as economists had predicted. So, Friday morning, Dow futures were up 300 points and the 10-year Treasury note yield was also trending up around 0.67%. 

The private payroll report from ADP mirrored the abysmal BLS report. The ADP records started in 2002 and this was the single worst report in its history. It shows more than 20 million jobs were lost in the private sector in April. Keep in mind, the sample week used by ADP to pull its data was the week of April 12. In the subsequent weeks millions more Americans filed initial unemployment claims. The service industry took the brunt of the hit as 8.6 million furloughs were reported for service and hospitality positions. 

Initial unemployment claims for the last week totaled more than three million, bringing the seven-week total to more than 33 million Americans filing for unemployment. The continuing claims went up to more than 22 million people. That data point shows us how many people have filed within the last two weeks and are still on the claim rolls. It is important to note that the current requirements for qualifying for unemployment also include furloughed workers, independent contractors and others who previously were not eligible to file. 

Treasury makes a move

Economists forecast the United States federal deficit will reach $3.7 trillion for fiscal year 2020. To try and raise money to foot the bill for the COVID-19 stimulus plans, for the first time, the Treasury will sell 20-year bond notes. Starting May 20, the Treasury will auction off $20 billion of 20-year bonds, then reopen the 20-year bond in June and July at $17 billion each. This is part of an overall strategy to raise the size of all debt auctions.

It is forecast that the United States federal deficit will reach $3.7 trillion for fiscal year 2020 as the government tries to protect the economy from collapse during the COVID-19 crisis. The Federal Reserve helped by buying up $1.3 trillion in Treasurys over the last couple of months, but it is difficult to put a dent in the already devastating deficit. 

In response to this move, the 10-year Treasury note yield rose to 0.713% with the 30-year bond yield rocketing to 1.394%. That rise was quickly reversed for both notes as the markets absorbed Thursday's news of the latest jobless claims. The 10-year yield dropped to 0.690% with the 30-year yield falling slightly to 1.391%.

Purchases on the rise

Total mortgage application volume was only up 0.1% this week, according to the Mortgage Bankers Association, because refi applications have slowed. "Despite lower rates, refinance applications dropped, as many lenders are offering higher rates for refinances than for purchase loans, and others are suspending the availability of cash-out refinance loans because of their inability to sell them to Fannie Mae and Freddie Mac," says Mike Fratantoni, Senior Vice President and Chief Economist for the MBA.

Purchase volume, however, went up 7% week-over-week. Rates are historically low and as some states begin to reopen, and mortgage companies become more digitally focused with their offerings, people are taking advantage. This week's Freddie Mac average for a 30-year fixed-rate mortgage was sitting at 3.26%. 

Unfortunately, due to the massive job loss in American, loan forbearances are also on the rise. Of the loans in forbearance, 10.45% of them are Ginnie Mae-backed loans (VA, FHA, USDA). The MBA's Forbearance and Call Volume survey shows that overall, 7.54% of loans are in forbearance. That equals about 3.8 million mortgage loans.