The U.S. stock market ended the week largely higher amid the Federal Reserve unveiled a $2.3 trillion lending program and post-pandemic optimism. Interest rates also moved higher on this optimism as the 10-year treasury yield rose from 0.62% last week to 0.73% today. Meanwhile, the spread between the 10-year treasury yield and the 2-year treasury yield continues to widen as the short end of the curve is virtually unchanged and currently sits at 0.50%. Despite the optimism, the price of safe-haven gold still rose over 4.0% to $1,715 an ounce as monetary stimulus bolsters the metal and hinders the U.S. dollar. The price of crude oil fell nearly 20% on the week to $23.19 a barrel despite an agreement between Saudi Arabi and Russia to cut oil production as falling demand due to the coronavirus outweighed the reduction in output.

This Week's Economic Highlights

• The minutes from the Federal Reserve’s two impromptu meetings in early March, where they decided to cut interest rates to a range of 0% to 0.25% and purchase Treasuries and asset-backed securities, showed that their anticipated worst-case scenario is the economy wouldn’t begin to recover from COVID-19 damage until next year. However, after the minutes were released to the public, Fed Chairman Jerome Powell stated that “There is every reason to believe that the economic rebound when it comes, can be robust.”

• Initial unemployment claims soared by another 6.6 million for the week ending April 4th. Over the past three weeks, initial unemployment claims have totaled a staggering 16.8 million. Prior to this historical run of increasing unemployment claims, the largest weekly increase ever recorded was just 695,000 (1982) and the largest total was 15.3 million in (2008-2009).

• The U.S. Producer Price Index (PPI), a measure of wholesale inflation, fell by 0.2% in March after falling by 0.6% the month prior. Over the past year PPI has only risen a very minimal 0.7%. Core PPI, which excludes volatile food and energy prices, also fell by 0.2% in March but rose by a slightly higher yet still low 1.0% over the past year.

• The U.S. Consumer Price Index (CPI), a measure of retail inflation, fell by 0.4% in March as gasoline, airfare, and hotel prices fell by record amounts. Core CPI, which excludes volatile food and energy prices, dropped by 0.1% in March which marks its first monthly decline since January of 2010. Over the past year, CPI has only risen a moderate 1.5% while core CPI rose a still stable yet deteriorating 2.1%.

Quote

“It’s difficult to make predictions, especially with regards to the future.”

– Old Proverb