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Yields Stable as Oil Prices Plummet

Fixed income markets were only slightly changed this week as market participants were focused on the volatility in energy markets.  Crude oil for May delivery traded in negative territory while oil for June delivery plunged below $10/barrel before recovering later in the week.  These signficant declines come as the coronavirus-caused decline in economic activity has drastically reduced worldwide demand for oil and gas. 

Even the recent agreement by OPEC+ participants to cut production by ten million barrels a day isn't nearly sufficient to bring balance to energy markets, with domestic oil producers racing to cap wells and slow output.  The weakness in the US economy was once again underscored by the week's initial jobless claims release as 4.4 million new claims for unemployment insurance were filed.  This brings the total to 26.4mm over the past five weeks, which is equivalent to 17% of the pre-pandemic US workforce, and in line with an expected peak unemployment rate near 20%.

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