Treasury Yields Mixed After FOMC Minutes

FOMC minutes reveal distress over the COVID-19 pandemic. The minutes from the Fed’s March 15th meeting defended the recent rate cuts, promising the benchmark range to stay between 0 and 0.25% until price stability is regained and the labor market has recovered. ”All participants viewed the near-term US economic outlook as having deteriorated sharply in recent weeks and as having become profoundly uncertain,” the minutes stated, alluding to the potential for further action based on on how fast the US economy can get back on track – the timeline dependent on “containment measures put in place, as well as the success of those measures, and on the responses of other policies, including fiscal policies.”

To help shift the growth timeline forward, Congress is set to discuss an additional $250B aid package today. The emergency relief package requested by the Trump administration has yet to move forward as the political parties remain split on its intended usage. The need for emergency funding surmounted yesterday as new COVID-19 cases grew to more than 430,000 on Wednesday while Tuesday’s death toll hit 1,939 in the US. Confirmed global cases have quickly spiked past 1.5 million after reaching 1 million last week.

Saudi Arabia and Russia agree on an outline to cut oil production. During today’s OPEC+ emergency meeting, many of the world’s largest oil-producing nations developed an outline to cut output by 10-20 million barrels per day, which would represent the largest production curb in OPEC history. President Trump had elected to sit out of the meeting as he refuses to cut domestic production (much to Russia’s dismay), adding, “We have a tremendously powerful energy industry in this country now, number one in the world, and I don’t want those jobs being lost.” Crude futures retreated from earlier highs as energy markets worry that the cuts will not cover the estimated 35 million barrels of daily surplus. Economists now look to the G20 meeting scheduled for tomorrow where a broader number of leaders will discuss the oil output levels. The meeting will be the first time the G20 has held a meeting solely to address energy issues – a nod at the depth of the oil crisis. Energy secretary Dan Brouillette indicated that the US will join tomorrow’s conversation.

Day ahead. US weekly jobless claims figures remained elevated at 6.6 million this morning after hitting a record 6.648 million last week. US PPI figures for March fell 0.2% M/M. This is the largest drop in the cost of goods since 2015, with economists pointing out transportation, hotel accommodation, entertainment, and recreation being the hardest hit components. Fed Chair Jerome Powell will give his thoughts on the state of the economy this morning. The University of Michigan’s preliminary consumer sentiment index for April is estimated to fall 14.1 points to 75 for March. The Fed will release their balance sheet information this afternoon. In the past week alone, assets grew by $557.3B as a result of the Fed increasing purchases of securities.

US financial markets will also have an early close today at 2 pm EST and will be closed tomorrow in observance of Good Friday.