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March 31, 2020

Rates and Equities Rise as Congress and White House Discuss Additional Stimulus

 

White House and Congress discuss additional stimulus package to blunt economic impact of COVID outbreak. Senate Minority Leader Chuck Schumer hinted "this is certainly not the end of our work here in Congress - rather the end of the beginning." One point of focus for both Congress and President Trump is increased aid for state governments, particularly as tax revenues plummet and spending demands ramp up. House Speaker Nancy Pelosi added that "next we'll go from emergency mitigation to recovery...to grow the economy and create more jobs." Amid that backdrop, risk assets continue to climb higher, the S&P 500 now sitting 17% off its recent lows while Treasury yields climbed higher across the curve yesterday- the 10-year yield closing at 0.72%.

 

 

US and Russian energy officials to hold talks on collapsing oil markets. With crude oil prices declining to 18-year lows as global demand falters and OPEC and Russia continue to clash over production cuts, President Trump and Vladimir Putin agreed to have their respective nations jointly review alternatives to balance the market. The phone call between the two leaders occurred yesterday, shortly after President Trump described the oil price war as “crazy” to media. A long-time advocate of low oil prices, Trump even floated the idea of increasing the price nationally, explaining that "we don't want to have an industry that's wiped out." Market sentiment increased this morning, as the West Texas Intermediate bounced back more than 5%

 

 

Day ahead. The S&P/Case-Shiller home-price index for January, which tracks monthly changes in value of residential real estate, grew 0.3% from last month. The Chicago PMI numbers for March are expected to fall to 40 from last month's 49. The Conference Board's consumer confidence figures for March are expected to fall to 110, 20.7 lower from the previous month.

 

 

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