March 23, 2020 Headlines

The Fed continues to dig deeper into its war chest in an effort to ease market conditions. The QE program for Treasury and agency MBS no longer has an amount tied to it, with the central bank now committed to buy securities in “the amounts needed to support smooth market functioning.” The Fed will also now include agency CMBS as part of its MBS purchases, which is certainly needed given the significant spread widening that occurred in that sector last week. The Fed is also launching additional credit facilities to support corporate, municipal, and asset-backed bonds. This is about as close as it gets to a “shock and awe” campaign from a monetary policy perspective, and the Fed also said it expects to soon announce the establishment of a Main Street Business Lending Program to support lending to small-and-medium size businesses.

Treasury prices are unchanged to slightly higher at the moment, but agency MBS spreads are tightening relative to rates, which is a positive signal given the very volatile and sloppy pricing action last week. All eyes are now on Congress, which struggled yesterday to come to terms with a fiscal stimulus package (currently expected to be $2 trillion). Both sides will hopefully come to an agreement early this week.

Jason Haley
Chief Investment Officer

3/23/2020Chicago Fed Nat Activity Index-0.350.16-0.25-0.33
3/24/2020Markit US Manufacturing PMI4350.7
3/24/2020Markit US Services PMI4249.4
3/24/2020Markit US Composite PMI49.6
3/24/2020Revisions: Wholesale Inventories
3/24/2020New Home Sales750k764k
3/24/2020New Home Sales MoM-1.80%7.90%
3/24/2020Richmond Fed Manufact. Index-15-2
3/25/2020MBA Mortgage Applications-8.40%
3/25/2020Durable Goods Orders-1.00%-0.20%
3/25/2020Durables Ex Transportation-0.40%0.80%
3/25/2020Cap Goods Orders Nondef Ex Air-0.40%1.10%
3/25/2020Cap Goods Ship Nondef Ex Air-0.20%1.00%
3/25/2020FHFA House Price Index MoM0.40%0.60%
3/26/2020Advance Goods Trade Balance-$63.5b-$65.5b-$65.9b
3/26/2020Wholesale Inventories MoM-0.40%-0.40%
3/26/2020Retail Inventories MoM0.00%
3/26/2020GDP Annualized QoQ2.10%2.10%
3/26/2020Personal Consumption1.70%1.70%
3/26/2020GDP Price Index1.30%1.30%
3/26/2020Core PCE QoQ1.20%1.20%
3/26/2020Initial Jobless Claims1400k281k
3/26/2020Continuing Claims1782k1701k
3/26/2020Bloomberg Consumer Comfort63
3/26/2020Kansas City Fed Manf. Activity-105
3/27/2020Personal Income0.40%0.60%
3/27/2020Personal Spending0.20%0.20%
3/27/2020Real Personal Spending0.20%0.10%
3/27/2020PCE Deflator MoM0.10%0.10%
3/27/2020PCE Deflator YoY1.70%1.70%
3/27/2020PCE Core Deflator MoM0.20%0.10%
3/27/2020PCE Core Deflator YoY1.70%1.60%
3/27/2020U. of Mich. Sentiment89.595.9
3/27/2020U. of Mich. Current Conditions112.5
3/27/2020U. of Mich. Expectations85.3
3/27/2020U. of Mich. 1 Yr Inflation2.30%
3/27/2020U. of Mich. 5-10 Yr Inflation2.30%


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