The Market Today
90 Percent to Be Eligible for Vaccine in Three Weeks; Larger Spending Plans
by Craig Dismuke, Dudley Carter
CORONAVIRUS UPDATE (VS Coronavirus Chartbook – PDF)
President Biden Says 90% of All Adults Will Be Eligible for Vaccines by April 19: President Biden warned yesterday about the recent uptick in virus cases in the U.S. and urged governors to reinstate mask mandates in public places. He also announced plans for 90% of all adults to be eligible for vaccines by April 19. He also indicated a doubling of the number of pharmacies at which shots will be available. The White House also announced an extension on the renter eviction moratorium through June.
Astra Vaccine Problems Continue: Berlin has reportedly suspended use of the Astra vaccine for people under the age of 60 after more thrombosis cases have arisen. Germany is back to reassessing the vaccine. Quebec has also reportedly suspended use in people under 55.
Reports that Biden Spending Plan Could Be $4 Trillion: According to a report from WaPo, after floating a $3 trillion spending plan which included $1 trillion in tax increases, “some” White House economic advisors were “concerned that the plan could jeopardize the nation’s long-term financial stability. The officials worried that the large gap between spending and revenue would widen the deficit by such a large degree that it could risk triggering a spike in interest rates.” As such, WaPo’s sources indicated that the spending package, which is expected to be unveiled Wednesday, was increased to $4 trillion but funded with $3 trillion in tax increases. An aide for Senate Majority Leader Schumer said he was considering ways to use budget reconciliation to eventually pass parts of the Build Back Better budget plan.
Dallas Fed Index Reflects National Economic Trends: The Dallas Fed Manufacturing Index for the month of March exceeded expectations, jumping from 17.2 to 28.9 on broad-based strength. The production index increased 28.1 points to 48.0, its highest level on record. The new orders index rose to its third-highest level since 2006. The employment, workweek, and wages indices all surged higher. Reflecting the supply chain backlog, the delivery times index jumped to its highest level on record, 4.0 standard deviations above average. Of concern for inflation pressures, the index tracking prices paid for raw materials rose to its highest level since 2008.
Waller – Increase in Rates Is a “Good Sign”: Fed Governor Waller said yesterday that the rise in interest rates reflected a positive outlook on the economic recovery. “And that is actually a good sign, and they don’t appear to be going up in a bad fashion,” he said. He also noted, “If we saw a lot of disorderly performance in longer-term yield markets, we might have to step in just for financial stability reasons once again.”
Vaccines and Spending Package Lift Yields, Stocks Mixed: Yields rose and stocks jumped shortly after it was announced that the Ever Given vessel had been dislodged from the banks of the Suez Canal. Adding to the optimism were the reports on President Biden’s vaccine goals and talk of an even larger spending package. After trading at 1.64% in overnight activity, the 10-year yield jumped to 1.72% by the end of the day. The Dow grinded 98 points higher (+0.3%) to a new record-high at 33,171. The S&P 500 fell 3 points (-0.1%). In overnight trading, equity futures are down fractionally, global sovereign yields are higher (German 10-year is up 5 bps to -0.27%), and the 10-year Treasury yield is up to 1.75%.
Home Prices and Consumer Confidence: At 8:00 a.m. CT, the FHFA and S&P CoreLogic Home Price Indices are expected to show prices continuing to surge higher. Home prices are currently up more than 10% YoY according to the indices. At 9:00 a.m., consumer confidence is expected to jump in the March report from the Conference Board. New York Fed Bank President Williams is scheduled to speak at 1:30 p.m.