Daily Market Color

Fed Reiterates Transitory Inflation

Fed maintains accommodative policy
The FOMC concluded its two-day meeting today with the unanimous decision to leave its benchmark borrowing rate unchanged near zero and maintain current levels of asset purchases. “The sectors most adversely affected by the pandemic remain weak but have shown improvement. Inflation has risen, largely reflecting transitory factors,” their statement explained. The Fed also doubled down on the necessity for “substantial further progress” in the labor market and continued inflation near 2% to even consider reducing its bond purchases. A full comparison of today’s FOMC statement vs. that of the prior meeting can be found here.
After trading higher for much of the session, swap rates/UST yields reversed course during Powell’s presser following the announcement. A belly-led rally left rates 1-3 bps lower across the curve, the 10yr UST yield closing near 1.61% (-1bp). In equity markets, major US indices finished the day modestly lower, extending yesterday’s decline from record highs.
U.S. trade deficit widens
The U.S. trade deficit increased to $90.6 billion in March, representing the widest margin on record. The value of imports also soared to a new record high during the month.
President Biden unveils American Families Plan
President Biden unveiled his third spending package in his early Presidency today with the American Families Plan. The $1.8 trillion plan is focused on educational opportunities and child care support for families. Currently, the plan calls for universally free pre-Kindergarten and community college throughout the U.S. The President will make his first address to Congress tonight with more details on his American Families Plan and previous infrastructure plan expected.

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