March 26, 2020 Headlines

The US Senate unanimously approved a $2 trillion stimulus package to support the economy amid the COVID-19 crisis. Under the agreement, corporations are expected to be allocated $500 billion in loans, including a dedicated amount for airlines, and the loans are expected to have various restrictions related to stock buybacks and executive compensation. Small businesses should receive $350 billion of aid, and hospitals and other health-care providers will be allocated $150 billion. Individuals up to a certain income level will receive $1,200 per adult and $500 per child (checks reportedly to be delivered on April 6), and unemployment insurance will be increased by $600 per week and extended to fourth months (eligibility would also be expanded). With the bill passed in the Senate, pressure now shifts towards the House of Representatives which will vote on the bill Friday. The stimulus bill comes at a time where both the speed and severity of the virus’ economic impact is starting to show in the initial jobless claims data. Claims for the week of March 21st jumped to 3.2 million and for context the previous record was 695k in October 1982. The reading translates to an increase of 2% in the overall unemployment rate. This morning, the US Treasury prices are higher as the curve bull flattens. Recent efforts by the Fed have continued to filter through the fixed-income markets with asset spreads firming.

Chris Eckhoff
Associate, Investment Management Group

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