Economic and Fixed Income Insights, May 19, 2020

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.

Important Disclosures

This material was prepared by Stifel, Nicolaus & Company, Incorporated (“Stifel”). This material is for informational purposes only and is not an offer or solicitation to purchase or sell any security or instrument or to participate in any trading strategy discussed herein. The information contained is taken from sources believed to be reliable, but is not guaranteed by Stifel as to accuracy or completeness. Past performance is not necessarily a guide to future performance. Stifel does not provide accounting; tax or legal advice and clients are advised to consult with their accounting, tax or legal advisors prior to making any investment decision.

Stifel, Nicolaus & Company, Incorporated is a broker-dealer registered with the United States Securities and Exchange Commission and is a member FINRA, NYSE & SIPC. © 2020