Review for March, 23
US Treasury yields have declined and are about 1.66% per annum for ten-year securities. US stock indexes returned to growth - the Dow Jones added 0.3%, the S&P500 rose 0.7%, and the NASDAQ - 1.2%.
Yesterday, the text of the speeches of the head of the Federal Reserve and the head of the US Treasury, which will take place today and tomorrow in Congress, was published. Both officials note that the economy is recovering at a high rate, exceeding previous expectations. At the same time, the support measures taken will significantly strengthen economic growth, and Janet Yellen expects to achieve full employment in 2022, which is also in line with the updated forecast of the Fed. At the same time, Jerome Powell emphasizes that the state of the economy is still far from the goals of the regulator, thus once again assuring the markets in the long-term preservation of the current policy of the Fed. J. Powell especially noted that the current state of the labor market leaves much to be desired, and the unemployment rate of 6.2% does not reflect all the problems of the market. Thomas Barkin, president of the Federal Reserve Bank of Richmond, is of the same opinion. Yesterday, at the annual meeting of the American National Association of Business Economics, he noted that 2020 will leave behind a long negative impact on the economy. Such consequences include structural changes in the labor market, in particular, the possible decision of certain parts of the population not to return to employment after the end of the crisis. In the text of the speeches of J. Powell and J. R. R. Tolkien. Yellen did not mention the situation with the yields, however, since Barkin repeated his Friday statements, emphasizing that the rise in yields is a positive development, reflecting an improved outlook for economic growth. Nevertheless, the market hopes to hear comments on the level of yields from the heads of the Federal Reserve and the US Treasury. The main topic of the congressional hearings is the support of the population and the economy during the coronacrisis, so the speakers can avoid discussing the situation in the debt market, and rates can return to growth.
At the same time, in connection with the topic of the speeches, it is possible to clarify the details of Joe Biden's previously announced investment package, in particular, the market is interested in plans to raise taxes to finance these investments. Meanwhile, in Germany, quarantine measures were extended until April 18. Moreover, A. Merkel agreed with the leaders of the regions on the introduction of a hard lockdown during the Easter holidays. The situation with the spread of coronavirus in Europe remains not rosy, and the prospects are only getting worse against the background of the pause in vaccination. Oil prices continue their correction, Brent futures are down 1% today.
The oil market is dominated by the negative associated with the deterioration of the prospects for the recovery of demand in Europe. The lack of significant news does not allow the trend to turn around yet, and today the market will pay special attention to the assessment of oil reserves in the United States from the American Petroleum Institute (API).