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Curve Steepens Slightly As Data Shows COVID Impact

The financial markets were relatively calm this week, despite evidence of the havoc wreaked by the coronavirus-induced shutdown apparent in the week's economic data.  After trading lower for much of the week, Treasury yields recovered ground late in the week with shorter-dated maturities still registering slight declines while maturities over seven years managed small gains. 

Some of the most notable releases of the week's full economic data calendar were a 4.8% decline in quarterly GDP, a 7.6% quarterly decline in personal consumption, and another 3.8mm new claims for unemployment insurance.  The Federal Reserve's FOMC meeting did not produce any surprises, although Chairman Powell's comments following the meeting were notably downbeat. 

It is apparent that the recent economic scars will take a considerable amount of time to heal.  Although forecasts for the length of this recession vary, it is expected that the Fed will keep rates low for a very extended period of time.

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