The Federal Reserve has been pumping liquidity (aka, air) since late 2008. And the stock market and commercial real estate prices have soared.
We are back to the collapse of Lehman Brothers, but this time the virus is not due to the banking system.
(Bloomberg) — Distressed debt supply has surged $234 billion to $559 billion in just the past week, escalating this month’s jump to $423 billion and setting a pace that would nearly double the $215 billion record for a single month set in October 2008. If the total ends the month at these levels, it would be the biggest-ever increase in the par amount of debt in the ICE BofAML US Distressed Index.
Energy isn’t solely driving the distressed ratio (44.5%) higher anymore as all sectors now have double-digit distressed ratios.
Commercial and industrial (C&I) lending is approaching zero growth as of February.
Fortunately for America, The Federal Reserve is on call!
Thanks to Jesse at Jesse’s Cafe Americain!
The US housing and residential mortgage market have benefitted from the dreaded COVID-19 virus … in the sense that the 10-year Treasury yield and contemporaneous mortgage rates (30-year) have fallen since September 2019 (pre-COVID-19 breakout).
But the recent EHS numbers are for February (+6.5% MoM), not March. Expect around a 30% decline in existing home sales for March.
Here is a Washington DC area Realtor in action!