$1.9 Trillion stimulus plan becomes law – On Thursday President Biden signed the American Rescue Plan Act. It’s a $1.9 Trillion stimulus plan that includes direct payments of $1,400 for individuals making up to $75,000 a year, and $2,800 for joint tax-filers making up to $150,000 a year. It phases out at $80,000 and $160,000 respectively. Pandemic federal unemployment assistance of an additional $300 per week was extended to September 6, 2021. The child tax credit is expanded to $3,600 for children under six years old, and $3,000 for children six to eighteen years old. Previously the child tax credit was $2,000 per child. There is also an additional $7 Billion for another round of paycheck protection loans and $15 Billion for emergency injury disaster EIDL loans for businesses. It provides $21.25 Billion for local governments to provide rental assistance for lower-income renters. There is also $10 Billion to fund mortgage assistance for lower-income homeowners. There are funds for COVID vaccinations and testing, as well as assistance for states and cities. This accounts for just a small percentage of the $1.9 Trillion. It’s by far the largest stimulus plan ever enacted. While investors expect this to supercharge the economy, they also fear higher inflation which is causing interest rates to rise.
Stock markets this week – The Dow Jones Industrial Average closed the week at 32,778.64, up 4.1% from 31,496.30 last week. It is up 7% year-to-date. The S&P 500 closed the week at 3,943.34, up 2.6% from 3,841.94 last week. It is up 5.1% year-to-date. The NASDAQ closed the week at 13,319.86, up 3.1% from 12,920.15 last week. It is up 3.4% year-to-date.
U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 1.64%, up from 1.56% last week. The 30-year treasury bond yield ended the week at 2.40%, up from 2.28% last week. We watch bond yields because mortgage rates often follow treasury bond yields.
Mortgage rates – The March 11, 2021, Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate was 3.05%, up slightly from 3.02% last week. The 15-year fixed was 2.38%, up slightly from 2.34% last week. The 5-year ARM was 2.77%, up slightly from 2.73% last week.
Home sales – February home sales data will be released next week. Local data for February sales can be viewed on my website. You can search by city or zip code. The numbers are very strong.