Weekly Market Review: October 19, 2020

Weekly Market Review: October 19, 2020

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On Friday 10/16/20, after 2 p.m. ET, the Treasury Department released the deficit number for fiscal year 2020  (the 12 months ending 9/30/20): a record $3.13 trillion budget deficit. That total smashed the previous record deficit of $1.41 trillion set 11 years ago during fiscal year 2009. This year’s deficit was the difference between $3.42 trillion of tax receipts and $6.55 trillion of outlays (source: Treasury Department).

The continued strength of the U.S. housing market is being driven by two factors- a limited supply of homes for sale, and a historically low cost of money. At the end of August 2020, there were 1.49 million existing homes for sale nationwide, down 340,000 homes from a year earlier. Last Thursday (10/15/20), the average interest rate nationwide on a 30-year fixed rate mortgage fell to 2.81%, the lowest ever recorded in the U.S.A. (source: National Association of Realtors, Freddie Mac).

The nation adds new citizens either through immigration or births. The former has been complicated by the pandemic and the latter is in decline. The nation’s “general fertility rate,” defined as the number of births per 1,000 women between the ages of 15-44, was just 58.3 births in 2019, a record low rate for birth data that has been tracked nationally since 1909 or for the last 111 years (source: National Center for Health Statistics).

Notable Numbers for the Week:

  1. BELOW ONE – The last time the yield on the 10-year Treasury note was above 1 % was on 3/19/20 or seven months ago. The 10-year note yield closed at 0.74% last Friday 10/16/20 (source: Treasury Department).
  2. AT THE MARGIN – The top marginal tax rate used in the payment of federal income taxes in 2020 is 37%. The top marginal tax rate was 70% in 1979, 77% in 1969 and 91% in 1963 (source: IRS).
  3. SOCIALLY DISTANCING – Americans sold 745,000 existing homes in April and May this year as the country reacted to a pandemic-driven shutdown. That’s off 25% from the 998,000 existing homes sold in April and May 2019 (source: National Association of Realtors).
  4. WE NEED ONE OF EACH – There are 213 vaccines and 319 treatments for the COVID-19 pandemic in the development stage as of Friday 10/ 16/20. None of the test vaccines or treatments has yet to receive FDA approval (source: Milken Institute).

Mark R. Reimet, CFP®
CERTIFIED FINANCIAL PLANNER™

Jodie Booth
Financial Advisor