Daily Market Color

Treasury Yields Mixed After Fed Re-Affirms Commitment to Accommodative Monetary Policy 

Muted response from financial markets following March FOMC minutes release
Treasury yields/swap rates finished mixed across the curve after spending most of the session lower – the 10-year UST yield almost 2 bps higher at 1.67%.  Major US equity indices held near even on the day as investors continued to weigh myriad factors such as improving economic data, future tax policy, and evolving budget proposals.
Fed remains committed to accommodative monetary policy for the foreseeable future
The minutes released from the March FOMC meeting noted, “Participants noted that it would likely be some time until substantial further progress toward the Committee’s maximum-employment and price-stability goals would be realized and that, consistent with the Committee’s outcome-based guidance, asset purchases would continue at least at the current pace until then.”  Fed officials also forecast 6.5% GDP growth this year and estimate the unemployment rate could drop to 4.5%.
Trade deficit widened from $67.8 billion to $71.1 billion in February, a record high
Due to severe weather conditions and pandemic-related supply-chain disruptions, exports declined 2.6% to $187.3 billion, the first decline since last May.  Imports also experienced a decline, decreasing 0.7% to $258.3 billion.
G20 leaders are on board with Treasury Secretary Janet Yellen’s global minimum tax proposal
Italian Finance Minister Daniele Franco, who chaired the meeting, believes Yellen’s proposal of a global minimum tax rate for corporate profits aligns with the G20’s goals.  He added, “the G20 is expecting to reach an agreement in July” – the level of the tax rate presenting the largest hurdle for global finance ministers.

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