- The President signed a $2 trillion stimulus package intended to support American consumers and businesses
- The current federal funds target rate range is 0% to 0.25%
- The University of Michigan Index of Consumer Sentiment fell nearly 12% in March from the prior month
Top Three Market Headlines
U.S. Passes Historic Fiscal Stimulus Package: President Trump on Friday signed the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, an economic relief bill designed to assist consumers and businesses impacted by on-going measures to contain the spread of COVID-19. At $2 trillion, the package exceeds 9% of U.S. GDP and ranks as the largest aid package in U.S. history. Approximately 25% of the package will consist of direct cash payments to households, while the remaining 75% will be allocated to a range of measures, including loans for small businesses and distressed companies in industries deemed critical to national security, expanded unemployment insurance, healthcare and hospital funding, and delayed tax and student loan schedules.
Fed Significantly Expands Monetary Stimulus: Dramatically escalating its efforts to support the economy and financial markets, the Federal Reserve early last week announced extensive new monetary stimulus measures. Key actions include launching facilities to support the primary and secondary corporate credit markets (including buying corporate bonds for the first time ever) and establishing other facilities to support the flow of credit to consumers, businesses and municipalities. In addition, the Fed signaled an open-ended expansion of its quantitative easing, or bond buying, efforts. These aggressive measures come on the heels of the Fed’s recent move to cut the federal funds rate to zero.
Consumer Sentiment Falls Sharply: Consumer sentiment fell to a three-and-a-half-year low in March as the number of identified COVID-19 cases in the U.S. grew, according to the University of Michigan’s Index of Consumer Sentiment, released late last week. The Index fell to 89.1 in March, its lowest level since autumn of 2016, from 101.0 in February. March’s monthly decline ranks as the fourth largest in the 50-year history of the Index, indicating the suddenness with which consumers have grown concerned about COVID-19’s negative impact on the global economy.