Daily Commentary BY THE CURVE TEAM –

US Stimulus Gets the Nod

26th of March, 2020

There was a sense of calm overnight as the US Congress finally approved the US stimulus measures.

It was a somewhat better night in markets with equities holding on into the close to post their second day of gains. The yield curve finished the night a little steeper while the volatility in currency markets and gold subsided a little.

In the US, Congress finally approved the wide ranging stimulus measures. It will include cash payments to households and loans for businesses to help them get through the current economic impacts of lockdowns to contain the spread of the virus.

Just how big the impact of shutdowns in the US has been will become evident tonight when the weekly jobless claims data are released. After hovering in the low 200,000 region for the past couple of years, jobless claims jumped to 281,000 in the week ending March 14.

The current median expectation for the latest reading, which will be for the week ending March 24, is for a rise in initial jobless claims to 1.6 million. Some economists are forecasting for a rise in excess of 3 million so the data will be closely watched.

As the data starts to flow through it will give us some guide to the economic impact that fighting the spread of the virus is having. It is also likely to weigh on markets. It may also see further measures to offset the impact from central banks and governments alike.

David Flanagan

Director - Interest Rate Markets