Rates Fall Across the Curve as White House Discusses Additional Stimulus

 

President Trump calls for $2T in federal infrastructure spending. President Trump stressed the importance of a significant investment in infrastructure in the next bill when he tweeted “It should be VERY BIG & BOLD, Two Trillion Dollars, and be focused solely on jobs and rebuilding the once great infrastructure of our Country!” Despite the promise of more government spending, US Treasury yields ended mostly lower across the curve yesterday as COVID-19 cases continue to climb- most experts saying that the peak in the number of cases and business disruption is several weeks away. The 10-year US Treasury yield fell 6 basis points to close at 0.67% and is an additional 6 basis points lower this morning.

 

 

The Fed has announced another lending facility for foreign central banks. Tuesday evening, the Fed announced that it would launch a temporary lending facility for 170 foreign central banks and other international monetary authorities to convert their holdings of Treasury securities into US dollars through a repo agreement. The temporary repo facility will help ease the lack of liquidity in currency markets as more and more foreign central banks sell their Treasury holdings.

 

 

Day ahead. The ADP employment report, which represents 400,000 US business clients and approximately 23 million US employees working in private industrial sectors, showed a net loss of 27,000 jobs in the month of March. While the figure was less than the 150,000 decline predicted by economists, it still represents the first MoM contraction since September 2017. IHS Markit’s US manufacturing index, which provides an indication on M/M activity in the private sector, will be released at 9:45am ET and is expected to show a sharp contraction in manufacturing activity. Boston Fed President Eric Rosengren will speak (virtually) to the Greater Boston Chamber of Commerce this afternoon.