Yesterday, Federal Reserve Chairman Jerome Powell testified alongside Treasury Secretary Steven Mnuchin as to the effects so far of the CARES Act to the Senate Banking Committee. Mirroring his previous comments, he reiterated a likely long and difficult road for the U.S. economy, prompting the need for additional stimulus from both the Federal Reserve and federal government. COVID-19’s effects on the economy are starting to trickle down to the housing sector. For the month of April, housing starts plummeted by a record 30.2 percent, pulling the annual pace down from 1,276k to 891k, the weakest pace since February 2015. Building permits also dropped 20.8 percent in April, from 1,356k to a 1,074k unit pace, the weakest since January 2015. In the fixed-income markets, Treasuries sold off slightly, with the ten-year Treasury yield climbing to 0.69 percent, an increase of two basis points. The 30-year Treasury yield rose by four basis points to a level of 1.41 percent. In contrast, municipal yields fell sharply. The ten-year and 30-year MMD both fell by 14 basis points to yield 0.99 percent and 1.80 percent respectively.
Interest Rate Observations
Source: Thomson Reuters, Bloomberg. The table above reflects market conditions as of May 19, 2020.
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