Treasury Yields Rise as New COVID-19 Infections Show Signs of Leveling Off

 

Treasury yields rose modestly as the US COVID-19 death toll rose sharply on Tuesday. Five weeks into the coronavirus pandemic, New York reported its highest number of deaths on record at 731. Despite this grim figure, the White House is already is already developing a plan to reopen the US economy in the next four to eight weeks as his administration sees new virus-related hospitalizations leveling off. President Trump added, “We’re looking at two concepts. We’re looking at the concept where you open up sections and we’re also looking at the concept where you open up everything.” Despite the Trump Administration’s optimism, the high death rate rocked markets as the S&P 500 dropped 0.2% and US Treasury yields were left only modestly higher across the curve, with the current 10-year trading at 0.75% this morning.

 

 

Small businesses are feeling the pain. Yesterday the National Federation of Independent Business released its monthly optimism index, an indication of the health of small businesses across the US, which displayed the largest decline (-8.1 points to 96.4) on record. Much of the data reflected in the index is from the beginning of March, making it safe to assume that optimism amongst small businesses has only deteriorated further since then, especially as the SBA and banks struggle with the complexities of getting funds to these impacted businesses via the PPP. Both the Fed and Trump Administration continue to open up their respective arsenals to try and help the situation — the Fed announcing additional small business lending facilities earlier this week, while an additional $250B in emergency relief was requested from Congress yesterday.

 

 

Day ahead. Chicago Fed President Charles Evans will speak to the Economic Club of Chicago’s Virtual Program this morning to address the economic outlook. US crude oil inventories figures will be released this morning, with economists expecting the number to reflect the production cut of 1.2 million barrels/day. The Fed will release its minutes from its March 15th meeting this afternoon.