This Weekly Market Update reviews the top three market headlines: Fed Expands Lending to Help Main Street, Consumer and Producer Prices Drop, U.S. Credit Markets Stabilize

Data Points

  • The NFIB Small Business Optimism Index for March registered the largest one-month decline in the survey’s 46-year history
  • The Producer Price Index and Consumer Price Index fell 0.2% and 0.4%, respectively, in March
  • The yield on the ICE BofA US Corporate Bond Index fell from 3.68% to 3.27%

Top Three Market Headlines

Fed Expands Lending to Help Main Street: The Federal Reserve last week unveiled a series of lending programs designed to support businesses, cities, and states affected by revenue declines resulting from COVID-19 containment measures. The programs, which total $2.3 trillion, include increased lending via previously-established credit facilities, plus the creation of two new programs: a Main Street Lending Program that will provide low-interest loans to mid-sized businesses, and a Municipal Liquidity Facility to support lending to states and cities. The Fed’s announcement came on the heels of a disappointing reading for the NFIB Small Business Optimism Index, which fell 8.1 points to 96.4 in March, the largest monthly decline in the survey’s history.

Consumer and Producer Prices Drop: Declining oil prices and COVID-19-related business shutdowns are exerting downward pressure on prices for goods and services, based on reports released last week by the U.S. Department of Labor. The Consumer Price Index (CPI) fell 0.4% in March from the prior month, driven by a 10.5% decline in the price of gasoline, while prices for airfares, hotel rooms, and apparel also fell. Falling gasoline prices also produced a 0.2% drop for the month in the Producer Price Index (PPI), which measures selling prices received by producers. In the 12 months through March, the PPI gained just 0.7%, a notable slowdown from the 1.3% mark reported in February.

U.S. Credit Markets Stabilize: After a tumultuous March, U.S. credit markets have begun to show signs of stabilizing in the wake of Federal Reserve actions to purchase various forms of public debt. Last week, yield spreads—the amount of extra yield that investors demand over comparable maturity Treasury bonds—narrowed across investment grade and high yield corporate bonds, while securitized debt, backed by everything from mortgages and student loans to car loans—has rebounded as well. In addition, the primary issuance market, where companies raise funds from investors, showed signs of thawing with the offering of a select number of deals in the high yield and leveraged loan markets.

As of April 13, 2020 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 10.50% 6.26% -16.44% -7.70%
S&P 500 12.15% 8.02% -13.15% -1.46%
Russell 2000 18.53% 8.16% -24.96% -19.98%
MSCI EAFE 8.30% 3.25% -20.32% -13.31%
MSCI Emerging Markets 6.83% 4.74% -19.98% -16.81%
FTSE NAREIT 24.15% 12.06% -18.54% -11.59%
Bloomberg Commodity 2.06% 2.62% -21.29% -22.23%
Barclays U.S. Aggregate 0.57% 0.84% 4.01% 9.98%

*Returns as of April 9, 2020 due to market holiday on April 10, 2020

Bureau of Labor Statistics 04/10/20, WSJ 04/08/20 and 04/09/20, NFIB Research 04/09/20, FRED 4/10/20, Roll Call 4/9/20. Data from Morningstar Direct. Returns for periods greater than one year are annualized. Investment advisory, named and independent fiduciary services are offered through Gallagher Fiduciary Advisors, LLC, an SEC Registered Investment Adviser. Gallagher Fiduciary Advisors, LLC does not express an investment opinion regarding any specific commodity, sector or individual security. Unless otherwise expressly noted, the contents of this communication do not constitute securities or investment advice, nor should this communication be construed as an opinion regarding the appropriateness of any investment. Gallagher Fiduciary Advisors, LLC is a single-member, limited-liability company, with Gallagher Benefit Services, Inc. as its single member. Neither Arthur J. Gallagher & Co., Gallagher Fiduciary Advisors, LLC nor their affiliates provide accounting, legal or tax advice. The information provided cannot take into account all the various factors that may affect your particular situation, therefore you should consult your Gallagher Fiduciary Advisors consultant before acting upon any information or recommendation contained herein to discuss the suitability of the information/recommendation for your specific situation.