Publications

U.S. Economic Indicators

The University of Michigan Consumer Sentiment Index fell 5.1 points to 95.9 in the preliminary March reading and is down 2.5 points from March of last year. The Index of Consumer Expectations fell 6.8 points to 85.3, while the Current Economic Conditions Index declined 2.3 points to 112.5. University of Michigan

U.S. News

The New York Times reports that after a day of negotiations between Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin, Congress is nearing a deal with the White House on economic stimulus measures in response to the coronavirus pandemic. The sweeping legislation will include free virus testing, assistance for lower-income families, and small business support, and is expected to be passed by the House today and sent to the Senate for a vote early next week. NYT

According to the Wall Street journal, many triple-B rated corporate bonds are at risk of being downgraded to junk status amid economic fallout from the coronavirus and collapsing oil prices. Yields on triple-B bonds saw their biggest two-day jump since the financial crisis on Wednesday, further intensifying the credit crunch for companies at the lower end of the investment-grade market. WSJ

U.S. Economic Indicators

The headline Producer Price Index (“PPI”) for final demand fell 0.6% in February but is up 1.3% from February of last year. The core — which removes volatile prices of food, energy, and trade services — ticked down 0.1% (up 1.4% from a year ago). BLS Report

Initial jobless claims declined by 4,000 to 211,000 last week. The four-week moving average rose 1,250 to 214,000. DOL Report

U.S. News

According to the Wall Street Journal, investors’ hasty retreat from risky assets as stock prices plunge and the oil price war intensifies has raised concerns that the pain might spread to the real economy by constraining lending. Shares in the largest financial institutions have dropped over 30% over the past few weeks as the post-financial crisis regulatory regime faces its first real test. WSJ

U.S. Economic Indicators

Consumer prices rose 0.1% in February (up 2.3% from a year ago). The “core” CPI, which excludes food and energy, increased 0.2% in February and is up 2.4% from last year. BLS Report

U.S. News

The Wall Street Journal reports that the U.S. Treasury is likely to push back the April 15 tax filing deadline as a part of an effort to mitigate the economic consequences of the coronavirus on households and businesses. While delaying required tax payments would effectively operate as a bridge loan for struggling individuals and businesses, it could also force the Treasury to temporarily increase borrowing due to the short-term loss of tax revenues. WSJ

Gwynn Guilford writes for the Wall Street Journal that although falling mortgages rates should boost housing activity somewhat amid coronavirus fears, the lower contribution of the housing sector to overall GDP growth since the housing bubble suggests it may not help overall growth as much as hoped. Supply constraints in the form of higher land costs, restrictive zoning, and scarce labor, coupled with softer demand as renting becomes more and more popular, mean that lower mortgage rates will primarily contribute to refinancing activity rather than lead to new housing starts. WSJ

U.S. Economic Indicators

The NFIB Small Business Optimism Index rose 0.2 point to 104.5 in February as four components improved and six weakened. Expectations for business conditions and job openings improved, while expectations for sales, capital expenditures, and inventories declined. NFIB Report

U.S. News

James B. Stewart writes for the New York Times that the coronavirus outbreak has put the financial system under intense pressure for the first time since the last financial crisis, unmasking underlying risks as stocks drop and credit markets tighten. One major crack emerging is in risky nonbank corporate lending that swelled during the current expansion but has yet to be tested by rising defaults in a real economic downturn. NYT

The Financial Times reports that President Trump plans to propose a “major” economic relief package to alleviate the consequences of the coronavirus outbreak on the hardest-hit parts of the economy. Spending measures under consideration include a payroll tax and other measures targeted at helping hourly workers and small businesses. FT

U.S. News

The Financial Times reports that the unfolding oil price war between Saudi Arabia and Russia is likely to seriously threaten heavily indebted, junk-rated U.S. shale producers. U.S. energy companies in the investment-grade corporate bond market are also at risk from Saudi Arabia’s aggressive production increase, as pressure on cash flows from collapsing oil prices could result in downgrades. FT

According to the Wall Street Journal, the U.S. semiconductor industry is pushing back against proposed changes to Commerce Department regulations that would further reduce sales of U.S. tech products to Chinese companies. The U.S. chip industry argues that in addition to lost revenues, regulations further severing technological ties between the U.S. and China could cede U.S. market leadership to South Korea in the short run and to China in the long run. WSJ