Daily Market Color

House Votes in Favor of $2T Stimulus Package


Market volatility persists as coronavirus cases continue to grow in the US. Helping to try and curb economic concerns, today the House formally voted in favor of the $2T stimulus package, with President Trump’s signature expected later this evening. This fiscal stimulus supplements the Fed’s recent actions – cutting their benchmark rate to zero, creating numerous lending programs, and signaling to the markets that “when it comes to this lending, we’re not going to run out of ammunition. That doesn’t happen.” Despite these efforts, markets experienced high volatility yesterday as the US overtook China as the country with the most virus cases — 85,991 confirmed infections with fatalities totaling 1,296. In debt markets, Treasury bill yields continued to set new record lows, as money market inflows spiked while the S&P 500 rose 6.2% capping the largest 3-day move since 1933. The 10-year Treasury yield ended yesterday near 0.84% and has traded 10 bps lower so far during today’s session.



Members from the G20 summit held yesterday have pledged $5T to help the global economy. WHO director Tedros Adhanom Ghebreyesus addressed the leaders by saying, “You have to come together to confront the defining health crisis of our time: We are at war with a virus that threatens to tear us apart – if we let it.” The G20 committed to a coordinated response and for full funding of the WHO’s Strategic Preparedness and Response Plan. Leaders also stressed the importance of funding increased research and development. Separately, Chinese President Xi Jinping and President Trump discussed the outbreak yesterday. The last time the two leaders talked was early February when the virus impact on the US was still minimal. President Xi offered support as he said, “under current circumstances, China and the US must unite to fight the virus.”



Day ahead. Normally a closely monitored release in determining the health of the US consumer, today’s print of monthly personal income and outlays carried minimal weight, with financial markets still unable to forecast the economic impact of the virus. US personal income for February rose 0.6% from the previous month (+0.4% expected), while consumer spending rose 0.2% (matching expectations). Detailing consumer price inflation, the personal consumption expenditure (PCE) price index rose 0.2% in February from January’s figures.


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