FinSer 

 Financial Focus

March 27, 2020 

GOOD MORNING! Jaws dropped as claims for unemployment insurance benefits for the week ended March 21 skyrocketed to an unprecedented high of 3.3 million from the previous week’s 282,000 on coronavirus-related shutdowns (attachment #1). The number of jobless claims will likely continue to increase to record levels in the weeks ahead as more industries and sectors of the economy shut down in an effort to contain COVID-19. Stocks took the news pretty well and rallied (+6%) for a third day, thinking it will give the house a kick in the posterior to pass the $2 trillion relief bill and maybe even do more stimulus in the near term. The Dow (and the other indices may have followed) as tekkies and line-drawing gnomes pointed out the index found support at the midpoint of the 2009 low and the record high made last month (attachment #2). Treasury prices also rose with the shocking data, but more so due to the Fed. The central bank continues to run up its credit card (Fed’s balance sheet attachment #3) on Treasury and Agency mortgage-backed securities outright purchases. A recount shows that since Monday the Fed has bought $287.4 billion Treasuries and $108.8 billion mbs. Municipals and gold continued in their strong recoveries. Everything was being bought except oil and the dollar. The dollar is weakening on the thought of the hugely yawning federal deficit.
This morning stocks are taking a step back after reports the number of US cases of COVID-19 have topped China and Italy. Also pressuring stocks are reports that the House might not be able to pass the Families First Coronavirus Response Act by voice vote, thereby delaying the needed passage before going to the President to sign. The de-risking based upon those reports and going into a weekend coupled with the Fed monopolizing the bond markets have Treasury prices higher, yields lower. The rush for cash or cash equivalents is keeping negative yields out as far as the December-maturing T-bills. Today’s economic calendar has February’s personal income, spending, and savings along with associated PCE deflators. Unless it shows extreme weakness the markets will treat it as BC (Before COVID-19) and will treat it as irrelevant. There will probably be more interest in the release of the final reading of the University of Michigan Consumer Sentiment Index. Stay safe.                                                

GENERAL
TODAY             
PREVIOUS        
FED FUNDS
0.0% to 0.25% 0.0% to 0.25%
1 MONTH LIBOR
0.95913% 0.92488%
S & P 500
2632.92 2475.56
GOLD
1640.40 1635.90
YEN
108.56 109.96
EURO
1.1023 1.0955
WEST TEXAS CRUDE
22.60 24.49
T-BILLS
YIELD                
YIELD                 
3 MONTH
-0.09 -0.08
6 MONTH
-0.02 -0.02
1 YEAR
0.10 0.11
T-NOTES / BONDS
YIELD                 
YIELD                  
2 YEAR
0.26 0.30
3 YEAR
0.32 0.36
5 YEAR
0.44 0.50
10 YEAR
0.75 0.81
30 YEAR
1.34 1.36

Data Source: Bloomberg Financial Markets
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