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March 23, 2020

Senate Fails to Pass Stimulus Bill Causing Rates to Fall

 

Senate fails to pass stimulus package. Democrats voted against a second stimulus bill in the Senate -characterizing the bill as a "large corporate bailout " that fell short of meeting the funding needs of local governments and consumers. The urgency for further stimulus continues to grow as US states increase their containment efforts of the novel coronavirus with nationwide cases rising past 14,000 -- Delaware, Louisiana, and Ohio becoming the latest states to mandate a lockdown. The rapid spread of cases...

March 20, 2020

Treasury Yields Slip Despite 2nd Congressional Stimulus Bill

 

Treasury yields and swap rates continue to fall despite 2nd Congressional stimulus bill. The stimulus package would include tax rebates in $1,200 increments, $58 billion in credit to airline companies, and $208 billion in loans to other businesses impacted by the outbreak. The first signs of economic deterioration were highlighted in the labor market in yesterday’s US jobless claims release. Claims climbing to 281,000 (above estimates that had called for 220,000) the Economic Policy Institute estimating that the...

March 19, 2020

Senate Passes a $1T Fiscal Stimulus Package

 

Risk assets fall despite second wave of Congressional spending. The Senate voted 90-8 to pass a second bill costing up to $1T to provide relief for those affected by the coronavirus and to increase the supply of available tests. The House is in recess this week, but it is expected that President Trump will sign the bill into law early next week. Congress is already discussing a third stimulus package that could total up to $1.3T including $500 billion in direct payments to Americans and up to $50 billion in...

March 18, 2020

$1T Fiscal Stimulus Package Proposed by Trump Administration

 

Trump Administration proposes $1T fiscal stimulus package- sending rates higher across the curve. The package would still need to be passed by Congress, but would match the other massive stimulus packages suggested by Germany and Italy. Rates rose dramatically as the prospect of fiscal stimulus set the stage for sizeable budget deterioration across the developed world. The 10-year yield ultimately rose 36 basis points on the day to close at 1.08% while the spread between 10-year and 2-year Treasury yields widened...

March 17, 2020

President Trump Warns Markets of Possible Recession

 

US markets brace for a recession. President Trump hinted the US was headed towards a recession caused by “an invisible enemy.” Treasury Secretary Steven Mnuchin is pitching Senate Republicans on an $850 billion stimulus package to cushion the virus impact. The package includes $50 billion for the airline industry in addition to a large general stimulus with a potential payroll tax cut. Mnuchin is also aiming to increase the amount of available tests and providing paid leave to hourly workers. Senate Minority...

March 16, 2020

Fed Announces 2nd Emergency Rate Cut

 

The Fed slashed its benchmark rate to near zero. In an attempt to curb the coronavirus impact on the economy, the Fed cut its benchmark rate range to 0% - 0.25% two days prior to the FOMC meeting. In addition, it pledged to buy $500 billion in Treasury and $200 billion in MBS starting today. Chair Jerome Powell said the Fed would leave rates at this low level “until it is confident that the economy has weathered recent events and is on track” at his press conference on Sunday. This is the first time that the Fed...

March 13, 2020

Fed Injects Liquidity into Markets with $1.5 Trillion Easing Program

 

The Trump administration and US House Speaker Nancy Pelosi are reportedly near an agreement on a bill to curb the virus impact. President Trump’s speech on Wednesday did not contain specifics of a fiscal stimulus and failed to calm markets. Paid sick leave, increase in Medicaid funds, and better unemployment benefits are the some of the debated issues. With the global death toll topping 5,000, the US will ramp up testing for the virus with President Trump tweeting “All Red Tape has been cut, ready to go!” this...

March 12, 2020

Rates Fall After President Trump's Stimulus Package Fails to Quell Virus Fears

 

Treasuries and haven assets are rallying after President Trump’s coronavirus remarks yesterday. Starting Friday, President Trump has issued a 30-day European travel ban coupled with an underwhelming stimulus package that failed to calm the markets. Trump’s aid package is awaiting approval from Congress and includes paid sick leave for who are ill or quarantined. The Small Business Association has also pledged to offer low-interest rate loans to cushion the virus impact. Yesterday morning, the WHO also declared...

March 11, 2020

Rates Rise After President Trump Announces Economic Stimulus to Curb Virus Impacts

 

President Trump announced a stimulus plan to curb coronavirus impacts on the economy. Confirmed virus cases in the US have passed 1,000 and the CDC has cautioned that the containment window has passed for certain parts. President Trump has pushed to suspend payroll taxes with other lawmakers preferring targeted measures to help hourly workers and the travel industry. Airlines in the US are still cutting flights both domestically and internationally. VP Pence confirmed that an additional 4 million virus tests will...

March 10, 2020

President Trump Set to Announce Economic Stimulus Amid Virus Fears

 

President Trump’s administration appears set to announce stimulative measures to support US economy. Though the exact measures are unclear, President Trump signaled that “they will be very major” and will be announced at a press conference later today. The COVID-19 outbreak reached new highs yesterday with cases in China tripling and the entire nation of Italy under lockdown. The WHO is close to declaring the outbreak a global pandemic with its spread to more than 100 countries now. Rates are marginally higher...

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