Daily Market Color

Rates Fall as Oil Hits New 20-Year Low


Congress and Trump administration close in on additional economic stimulus package. Treasury Secretary Steven Mnuchin announced that the bill will add an additional $300B for the Small Business Administration’s Paycheck Protection Program, $50B for the Economic Injury Disaster Loan, $75B for hospitals, and $25B for increased testing. Aid for state and local governments will not be included in the deal according to Senate Majority Leader Mitch McConnell. With the small business rescue fund already exhausting their $350B funding capacity last week, lawmakers are hurrying to pass the new $500B package early this week. Nancy Pelosi echoed this sentiment, adding, “We know that we have an opportunity and an urgency to do something for our hospitals, our teachers, and firefighters, and the rest right now.” The need for additional testing increased in New York, with the state reporting 6,000 new cases on Sunday (nearly a third of all cases in the US). Treasury yields are slightly lower from Friday’s close, trading at 0.63% this morning.



Oil declines to its lowest level since 1999. Despite OPEC’s decision to cut oil production last week, oil prices have continued to tumble with US Crude dropping 40% to dip below $11/barrel today. With national storage quickly depleting, the Railroad Commission of Texas, which regulates the oil and gas industry in the region, may limit output in the state starting early next week. If oil prices continue to fall at the current rate, reports suggest President Trump could provide incentive to domestic producers to leave crude in the ground.



Day ahead. The Chicago Fed national activity index was released this morning at -4.19 for March, indicating an economic contraction due to the figure falling below the -0.35 threshold. The index measures overall economic activity through 85 indicators ranging from production, income, employment levels, personal consumption, housing, sales, orders, and inventories. The index fell to its lowest print since 2009, with the largest drop in production-related indicators. The Fed will continue rolling out their dollar liquidity program today through three operations totaling $1.5T.


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