Tuesday, July 21, 2020 |
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| MANAGING DIRECTOR: Scott Carrithers PORTFOLIO SALES AND SERVICE: Steve Panknin • George Morris • Jeff Goble • Chris Thompson • Sean Doherty Kevin Doyle • Lonnie Harris • Mark Tranckino • Robert Schuyler • Tom Toburen Josh Kiefer • Nicole Burczyk • Natalie Regan • Aaron Stoffer • David Farris |
| US Treasury Market | |||||||||||
| Date | 1 mo | 3 mo | 6 mo | 1 yr | 2 yr | 3 yr | 5 yr | 7 yr | 10 yr | 20 yr | 30 yr |
| 07/14/20 | 0.11 | 0.15 | 0.14 | 0.17 | 0.14 | 0.19 | 0.28 | 0.47 | 0.63 | 1.09 | 1.30 |
| 07/15/20 | 0.12 | 0.16 | 0.15 | 0.15 | 0.16 | 0.18 | 0.28 | 0.47 | 0.64 | 1.11 | 1.33 |
| 07/16/20 | 0.12 | 0.11 | 0.13 | 0.14 | 0.16 | 0.17 | 0.28 | 0.46 | 0.62 | 1.09 | 1.31 |
| 07/17/20 | 0.11 | 0.11 | 0.13 | 0.14 | 0.14 | 0.18 | 0.29 | 0.47 | 0.64 | 1.11 | 1.33 |
| 07/20/20 | 0.11 | 0.13 | 0.14 | 0.14 | 0.16 | 0.18 | 0.29 | 0.47 | 0.62 | 1.10 | 1.32 |
Source: U.S. Department of the Treasury, as of 07/20/2020
Extended Stimulus … and “Lower for Longer”
Extended Stimulus … and “Lower for Longer”
Financial stimulus from the CARES Act is scheduled to expire in the weeks and months to come, leaving legislators with very little time to negotiate uninterrupted relief. With the all-important elections just months away, the timing and extent of any additional stimulus is particularly partisan.
Weeks ago, the House narrowly approved an expansive $3.5 trillion coronavirus relief bill which they named the Heroes Act. The Senate formally began stimulus talks yesterday seeking to finalize their roughly $1 trillion proposal for additional relief. Obviously, there are significant differences indicating difficult negotiations ahead.
The House version would extend benefits for the unemployed, renters, homeowners, students in debt and the struggling U.S Postal Service. Additionally, the House would initiate hazard pay for front line responders, renew another round of $1,200 payments to individuals and deliver almost $1 trillion for state and local governments.
The more modest Senate version would prioritize business liability protections, tax credits for the safe opening of schools and small business, and a broad-based payroll tax cut.
According to Bloomberg’s Economists, “We expect negotiations will result in a package much closer to the $1 trillion floated by Republicans. Aid around this size would not on its own derail nascent recovery if heavily targeted at a short horizon, but less generous fiscal support stands among the reasons we expect economic rebound will weaken substantially in coming months.”
If so, interest rates should remain “lower for longer”.
Weeks ago, the House narrowly approved an expansive $3.5 trillion coronavirus relief bill which they named the Heroes Act. The Senate formally began stimulus talks yesterday seeking to finalize their roughly $1 trillion proposal for additional relief. Obviously, there are significant differences indicating difficult negotiations ahead.
The House version would extend benefits for the unemployed, renters, homeowners, students in debt and the struggling U.S Postal Service. Additionally, the House would initiate hazard pay for front line responders, renew another round of $1,200 payments to individuals and deliver almost $1 trillion for state and local governments.
The more modest Senate version would prioritize business liability protections, tax credits for the safe opening of schools and small business, and a broad-based payroll tax cut.
According to Bloomberg’s Economists, “We expect negotiations will result in a package much closer to the $1 trillion floated by Republicans. Aid around this size would not on its own derail nascent recovery if heavily targeted at a short horizon, but less generous fiscal support stands among the reasons we expect economic rebound will weaken substantially in coming months.”
If so, interest rates should remain “lower for longer”.
This information is intended for institutional investors only. The material provided in this document/presentation is for informational purposes only and is intended solely for private use. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instruments.
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