Market Focus: Stimulus Details, Covid-19, And The Fed

Lawmakers and the Trump administration, as expected, reached a preliminary agreement on an estimated $2 trillion stimulus package. Yesterday stocks rallied on the assumption a deal would get done. A lot is being made that the DJIA had the best day since 1933; it is just a number and has no significance but does make a nice headline in otherwise dire news. The stock indexes this morning aren’t moving much, but the indexes are better. Now the money will flow to individuals and businesses. For big business help, there are strings attached that will eventually help facilitate quicker repayment. Boeing this morning did, however, draw a line in the sand, saying any assistance from the government will be refused if the string is an equity position in the company. Airlines will be given grants with strings, no layoffs for a yet settled date, and airlines may have to provide an equity position to the government until specific goals are achieved. Overall there are a lot of specifics that haven’t been revealed yet.

The Senate hasn’t voted yet but will do so later today. Billions in assistance for companies, states, and cities. Along with checks to most Americans and loans to small businesses to maintain payroll. No help though for government leaders; businesses owned by the president, vice president, members of Congress, or heads of executive departments would be excluded from receiving aid. The block would also extend to companies controlled by their children, spouses, or in-laws.

Investors are awaiting specific details about the pending legislation, which is likely to include direct financial checks to many Americans, an expanded unemployment-insurance program, and loans to businesses. The stimulus measures come as markets brace for a surge in unemployment claims tomorrow as business activity stalls while the nation tries to contain the outbreak.

This morning, weekly MBA mortgage applications (the MBA data accounts for 75% of the apps) declined as expected. The composite -29.4%, purchase apps -15.0%, refinance apps -34.0% from the prior week.

Feb durable goods released at 8:30 am ET; it’s a preliminary report. Orders were expected at -0.7% but increased by 1.2%. Excluding volatile transportation, orders expected at -0.3% were down 0.6%. Core capital goods expected to come in at -0.4%, were down 0.8%. This, of course, is February data. January’s new orders initially reported -0.2% was revised to +0.1%.

At 9:00 am ET, January FHFA housing price index expected +0.4% as released +0.3%. January revised from +0.6% to +0.7%, yr/yr price index +5.2%. Old data.

At 9:30 am ET, the DJIA opened +225, NASDAQ unch, S&P -1. 10 yr note yield 0.83% -1 bp. MBS securities prices at 9:30 am ET +30 bps from yesterday’s close and +86 bps from 9:30 am yesterday.

At 1:00 pm ET, Treasury will sell $41B of 5 yr notes.

Cases top 435,000; 19,625 dead, 111,822 recovered: Johns Hopkins data. Tokyo asks people to stay inside as new cases spur lockdown risk. India locked down, UK shuts parliament; Iran, Singapore tightens curbs. Fired Americans send state unemployment websites crashing down. The humming of Chinese plants returns as the rest of world reels.

Source: TBWS