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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 outbreak will eliminate an additional 3 million jobs by the summer. The Philadelphia Fed’s manufacturing report saw the region’s factory activity index plummet to -12.7 -- the biggest decline on record. US Treasury yields which had risen throughout the day ended lower across the curve -- the US 10-year Treasury yield falling 5 basis points to 0.987%.

 

 

Fed and ECB announce new funding measures to cushion the impact of the virus on financial markets. The Fed boosted bond buying and promised billions of dollars to nine other central banks experiencing dollar shortages at near-zero rates including Australia, New Zealand, and Singapore. The ECB also announced a new bond-buying program while the BOE cut rates. The ECB increased its bond purchase program program to €750 billion, adding Greek government bonds and non-financial commercial paper to the list of assets purchased. Yesterday, the Bank of England voted to cut its policy rate by 15 bps to 0.10% in an emergency cut. The BOE also announced a quantitative easing program that will boost its holdings of UK government bonds and investment grade corporate bonds by £200 billion

 

 

Day ahead. US existing home sales will be released for the month of February, current forecasts call for an increase to 5.5 million from last month's 5.46 million figure. The Baker Hughes rig count will be released this afternoon.

 

 

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