U.S. Treasury yields bounced off their lows on Thursday as a surge in oil prices spurred by hopes of coordinated production cuts between Saudi Arabia and Russia helped to lift inflation expectations, a bugaboo for bondholders.
Investors also saw a back-to-back jump in U.S. weekly jobless claims, closing the curtain over one of the strongest labor markets in American economic history.
was down 1.4 basis points to 0.218%, around its lowest level since May 2013.
What’s driving Treasurys?
President Donald Trump said in a tweet that he had talked to Saudi Arabia and Russia, and that he expected to see oil production cuts of up to 15 million barrels a day.
His comments helped to push up oil prices and inflation expectations, based on trading in Treasury inflation-protected securities. Bond investors’ inflation prospects over the next decade, or breakeven rates, rose by around 11 basis points to around 1.03% on Thursday.
Higher oil prices and inflation pressures can weigh on government paper by eroding the value of their fixed-interest payments. The surge in inflation expectations in TIPs also reflected the lack of liquidity in certain corners of the Treasurys market, said market participants.
Trump’s comments helped to offset disappointing economic data that had provided a bullish tilt in early trading on Thursday. Americans filing for unemployment benefits for the weekly period ending March 28 surged by 6.65 million, following a 3.28 million rise in initial jobless claims in the week before. Economists polled by MarketWatch had forecast claims to surge by 4 million.
As an up-to-date indicator of the job market’s travails, the claims number highlights the disruptions that are threatening to throw the world’s largest economy into a recession.
In other data, the trade deficit fell $39.9 billion in February, down from $45.3 billion in January.
The surge in inflation expectations “speaks to how illiquid the TIPs market is,” said Michael Lorizio, senior fixed-income trader at Manulife Investment Management. “Pre-crisis, breakevens were anchored at a tight range. The problem is you’re continuing to see illiquid pockets in the Treasurys market like TIPs, which are illiquid even on its best day.”
“More people are applying for unemployment insurance as more segments of the economy are shutting down in the wake of the coronavirus,” said Andrew Smith, chief investment officer of Delos Capital Advisors, in a note.
“Companies will take a considerable amount of time to re-hire workers. The longer it takes for the economy to restart, the longer companies will take to get back into gear,” said Smith.
The Fed’s actions may encourage Wall Street’s near two dozen primary dealers to facilitate trading in the bond-market to ramp up their operations and soothe liquidity issues that briefly seized up liquidity in the Treasurys market last month, analysts said.
In a chilling reminder of how fast the coronavirus epidemic has spread around the world, Fitch Ratings changed its 2020 view on the global economy to “deep global recession” from slow growth in just 10 days.
“The speed with which the coronavirus pandemic is evolving has necessitated another round of huge cuts to our [gross domestic product] forecasts,” Fitch said in a research report.
The credit rating agency said it now expects world economic activity to decline by 1.9% this year. On March 22, Fitch had projected global GDP growth of 1.3%.
“A deep global recession in 2020 is now Fitch Ratings’ baseline forecast according to its latest update of its Global Economic Outlook (GEO) forecasts,” Fitch said. The new baseline forecast incorporates full-scale lockdowns across Europe, the U.S. and many other countries, something the forecast in March didn’t assume. Read MarketWatch’s coronavirus update.
“The forecast fall in global GDP for the year as a whole is on par with the global financial crisis, but the immediate hit to activity and jobs in the first half of this year will be worse,” said Brian Coulter, Fitch’s chief economist.
In the U.S., Fitch said it expects the lockdowns to result in an “unprecedented peacetime” one-quarter GDP decline of 7% to 8% in the second quarter, or 28% to 30% on an annualized basis.
For the year, Fitch is projecting U.S. GDP to decline 3.3%. Last week, Fitch said if its baseline GDP forecast deteriorated further, U.S. GDP could fall by “almost” 1%, which means the effects of the coronavirus outbreak is much worse than Fitch had imagined it could be at the time. See Economic Report.
Fitch isn’t alone in predicting a deep recession, as Bank of America Global Research said it expects the COVID-19-related recession in the U.S. to be the “deepest recession on record,” nearly five times worst than the postwar average.
Fitch also now expects eurozone GDP to fall by 4.2% this year and the U.K.’s GDP to decline 3.9%, while China’s GDP is expected to grow by less than 2%. Last week, the expectation was for Europe’s GDP to fall “by more than 1.5%” and China’s GDP to slow to growth of “slightly higher” than 2%, if its baseline forecast deteriorated.
While there is some optimism that in the second half of the year, government stimulus could help contribute to a recovery, and that the health crisis will likely be broadly contained, Fitch warned not to expect a V-shaped economic bounce, as the negative impacts on consumer behavior are likely to linger into next year.
“Our [new] baseline forecast does not see GDP reverting to its pre-virus levels until late 2021 in the U.S. and Europe,” Coulton said.
One of my best friends in New York is self-quarantining. She is smart, extremely well-read and makes me laugh. We read long-form articles together and, afterwards, we discuss them over tea. We don’t always agree, which we like, but we do agree most of the time, and we’re OK with that, too.
My friend remembers the AIDS crisis of the 1980s and 1990s, and witnessed people get up from a park bench if they thought a sick person sat next to them. She did not even get around to telling me about the many polio epidemics. Perspective is good: THIS IS NOT THE FIRST PANDEMIC. (That’s Point No. 1).
We take tap-dancing classes together (her idea). At least, we did until the social-distancing policies prescribed by public health officials came into effect. On Monday, we each vowed to practice 15 dance steps. That’s more “dig, brush, toe, heel, paddle and roll, paradiddle!” for me.
It’s good to be cautious, but it makes sense to be careful and take your time.
She listens carefully, tells me exactly how she feels, and remains open to changing her mind. I learn from her. Before tap-dancing class, she asks me, “So, Quentin, what color is your tutu today?” I usually describe the most ridiculous-sounding tutu. “Pink,” I say, “with yellow ruffles.”
My friend is 95, and she is now blind. Mostly, I feel grateful that we are both here at the same time, and that our paths crossed. She is one of my favorite people on the planet. She grew up in an Irish community in Massachusetts. I grew up in Dublin. She calls me “lace-curtain Irish.”
She needed a couple of weeks’ worth of groceries. That is how I found myself with another Irishman — who moved to the U.S. 30 years before I did — at the Fairway Market on Broadway and 74th Street on Monday afternoon, with a shopping list in one hand and a grocery cart in the other.
We’d been asked to help buy our friend groceries, so we joined forces. I didn’t like him usurping my place as Sir Edmund Hillary on this potentially hazardous expedition. (Nor did I want to be Francis Crozier to his Sir John Franklin.) But it’s a lot for one person to carry the load. We made a good team.
I wore a balaclava I’d bought for a New Year’s Eve midnight run in Central Park.
“If we get coronavirus, a grocery store is where we’ll get it!” I said, surveying the food aisles. He looked at me like I was about to rob a store, not shop in one. “What’s wrong?” I said. I was wearing a balaclava I’d bought for a New Year’s Eve midnight run in Central Park. He tried to muffle a laugh.
“Would you risk your life for a jar of marmalade?” I asked. He turned his head, as if to roll his eyes up to heaven, but then appeared to think better of it midroll. I presumed he was about to say, “You’re completely overreacting.” But he’s a gem, so he did a diplomatic 360-degree head roll, instead.
As for wearing a D.I.Y. mask, I could be wrong, I could be right, as the former Johnny Rotten sang. There are conflicting messages on whether a face mask other than the scarcely available medical-grade N95 helps. With so many people milling about, I decided to err on the side of caution.
Research has concluded that masks have helped reduce contagion by reducing droplets being sprayed into the air during flu season; and infectious-disease specialist Anthony Fauci has said the White House’s coronavirus task force is considering giving the public the green light to wear them.
N95 medical-grade masks help filter viruses larger than 0.1 micrometers.
N95 masks filter viruses larger than 0.1 micrometers (a micrometer, um, is one millionth of a meter). The coronavirus is 0.125 micrometer. Still, I would not wear an N95. They’re needed elsewhere. And if I am asymptomatic? If I can avoid passing on one droplet while reaching for the chicken giblets, I will.
Proponents of face masks also point to countries in East and Southeast Asia, including South Korea and Taiwan, which appear to have slowed the spread of the coronavirus more effectively than the U.S., Spain and Italy have. But they also have other safety measures, including early testing, in place.
I wore gloves because studies have found that shopping carts are traditionally covered in all kinds of germs, just like subway poles and turnstiles, or anything else that lots of people touch on a regular basis. I constantly lose my gloves, alas. But I have adopted a wartime thrift: I wear odd pairs with pride.
I did not bring alcohol wipes. Next time, I will at least bring Clorox
wipes in a Ziploc bag. I tell myself every 15 minutes to wash my hands as soon as I get home both before and after I put the groceries away. “When you get home, Quentin, WASH YOUR HANDS.” (Point No. 2.)
Shopping carts are covered in all kinds of germs, just like subway poles.
Here’s the other reason I wore a ridiculous balaclava: It’s not comfortable, it reminds me that we’re dealing with a serious health emergency, it covers almost my entire head, and — here’s the science bit — I am constantly reminded: DO NOT TOUCH YOUR FACE. (That’s No. 3.)
If you take anything away from this, rather than becoming embroiled in a heated debate on face masks, take that. Coronavirus can survive longer on a solid surface than on a pair of gloves, but it can live for a time on different surfaces, so I try to be aware that it could be on my gloves, too.
Growing up in Ireland in the 1980s during the Troubles, and living in London during the 1990s, swanning around in a balaclava would have been a risky proposition, especially with an Irish accent. But during the 2020 coronavirus pandemic with my now transoceanic twang, I think I’ll be OK.
As an editor, I play devil’s advocate with my writers, push back and ask questions. It helps to be a little paranoid. I’m putting a life skill to good use. The coronavirus pandemic is a time when germaphobes (check), quirky paranoid types (check) and workaholics (check) come into their own.
I took my time, and I stayed 6 feet away from others whenever possible.
But here’s the other thing I learned during My Day at the Supermarket: Shopping can be stressful under these conditions. It’s good to be a cautious — and a smart — shopper. I usually want to get in and out in double-quick time, but I decided to be careful and take my time.
What’s more, I enjoyed it. Everything I could have done to minimize my chances of picking up COVID-19, I did. I stayed 6 feet away from others, whenever possible, including my shopping partner. We did not go at rush hour. I talked to staff and other customers.
Everyone is freaked out. Friendly banter puts me and, I hope, others at ease. A nice woman recommended the London broil. I read peer-reviewed studies — not Facebook
Viruses survive better on artificial fibers such as plastic, vinyl and polyester.
This, too, might help: Sarah Fortune, a professor who chairs the department of immunology and infectious diseases at the Harvard T.H. Chan School of Public Health, said that while health-care workers might have to worry about their clothes, we should not.
But here’s the deal: If you want to change clothes or wear a mask, do it. TRUST YOUR GUT. (Point No. 5.)
As my self-quarantining friend told me the other day on the phone, “Quentin, I’m 95! Do you think I’m scared of coronavirus?” But that doesn’t mean she’s standing in line at the supermarket, either.
If you are concerned about going to the grocery store, imagine what it’s like for those who work there. I told every staff member I spoke to at Fairway, “Thank you for working today.” They need to hear that. Customers must be frazzled, and a frazzled customer is often not a gentle or happy customer.
I also got something I couldn’t buy at any store or pharmacy. Getting out of the house for a couple of hours was a great tonic. I didn’t see Yoko Ono rummaging through the vegetables at Fairway — I did see her there once, and I left her to it — but I did meet another friend outside, from 6 feet away.
If you’re nervous about shopping, imagine what it’s like for the staff.
We had two weeks’ worth, maybe more, of groceries — including bottles, cans, six-packs of kitchen roll, liters of milk, jars of this, that and the other — and they were heavy. I walked one block, and we had a few more to go. I spotted an abandoned cart on the street corner. “We’ll return it,” I said. “Later!”
I quickly piled the groceries into the cart and pushed it across four traffic lanes on Broadway. We’re in the middle of a national emergency, after all; if the cops stopped me, I’d simply tell them the truth. Thank you, NYPD, first responders and health professionals, and thank you, Fairway Market.
As I headed down Amsterdam with the speed of a clanking, yet nutritious, bullet, a man ran out of a jewelry store in pursuit of another man. “People are dying, and you try to steal something from my store? You motherf—!” Ah, yes. There are always folks with bigger problems than mine.
It was a good day in Manhattan. To quote that opening line from the postwar film noir, “The Naked City”: “There are 8 million stories in the naked city. This has been one of them.” My 95-year-old friend would have been 23 when that film was released. She, too, has more stories to tell.
And on Tuesday, Equal Pay Day, it’s worth noting that many of these working women still make less money on average than their male counterparts, added EPI, a left-leaning Washington, D.C., think tank. Equal Pay Day marks the point in the year when the average woman’s earnings catch up to what the average man earned in the previous year: Women made about 22.6% less than men in 2019, after controlling for demographic factors.
Some 33.4% of employed women work in the health-care and social-assistance industry, currently overburdened by an influx of COVID-19 cases, as well as in the leisure and hospitality industry, which has been brought to a near-halt by closures aimed at slowing the spread of the virus, according to EPI’s analysis of Bureau of Labor Statistics data. That’s compared to only 15.7% of employed men.
“Women employed in both industries experience a gender wage gap,” wrote Valerie Wilson, director of the EPI’s program on race, ethnicity and the economy.
What’s more, more than one in five employed women work in health care and social assistance, the analysis found, with black women more likely than women of other races and ethnicities to work in a hospital or nursing-care facility.
Within the leisure and hospitality industry, women who work as wait staff and as desk clerks at hotels, motels and resorts also face gender wage gaps of 12% and 11%, respectively.
“While most men and women employed as restaurant wait staff and hotel workers earn modest hourly wages, the existence of a gender wage gap — and thus the elevated financial insecurity these women workers face — means that women in this industry are especially financially vulnerable in the event that they are out of work or on a severely reduced work schedule for an extended period of time,” Wilson wrote.
An earlier analysis by the Pew Research Center found that industries at greater risk of coronavirus-related job loss — like restaurants, retail trade and transportation services — counted “slightly” more women in their ranks (19.4 million women versus 18.7 million men).
Meanwhile, a “gender pay scorecard” of 50 major U.S. companies released this week by the investment firm Arjuna Capital and Proxy Impact, a shareholder-advocacy and proxy voting service, found that only Starbucks
pulled “A” grades; a full 25 of the companies received failing grades.
The scorecard ranked “quantitative disclosures (not qualitative assurances), commitments to report numbers annually, global coverage, and goals to close the gender pay gap.”
Reached for comment, a Starbucks spokeswoman said that “pay equity has long been a priority at Starbucks, and we’ve done serious work to ensure women and men are compensated fairly.”
A Mastercard spokeswoman referred MarketWatch to an earlier statement by executive vice chair Ann Cairns: “It’s essential for our business that we foster a workplace where all employees feel valued, respected and empowered to reach their greatest potential. That includes equal pay for equal work.”
A Citi spokeswoman declined to comment specifically on the report.
Equal Pay Day for all women falls on March 31 this year, but there are additional observances for women of different races and ethnicities, depending on how far into the new year they must work on average to catch up with a white male worker’s earnings from the previous year. Equal Pay Today, a project of the gender-justice organization Equal Rights Advocates, offers a full list here.
An Amazon spokeswoman confirmed Smalls was given the boot, claiming it was because he had violated social distancing guidelines and refused to remain quarantined, as instructed by the company, after he came in contact with an employee who tested positive for the virus.
“Despite that instruction to stay home with pay, he came on site today, March 30, further putting the teams at risk. This is unacceptable and we have terminated his employment as a result of these multiple safety issues,” Kristen Kish said in a statement.
The company also disputed the number of people who participated in the strike, saying only 15 of the 5,000 associates at the site took part.
Amazon called the workers’ accusations “unfounded,” saying it had taken “extreme measures” to protect staffers, including “tripling down” on cleaning, obtaining safety gear, having employees keep safe distances from each other and instituting temperature checks for anyone entering the facility.
“Like all businesses grappling with the ongoing coronavirus pandemic, we are working hard to keep employees safe while serving communities and the most vulnerable,” the statement said. ““The truth is the vast majority of employees continue to show up and do the heroic work of delivering for customers every day.”
Calling the firing “disgraceful,” New York Attorney General Letitia James said her office was considering all legal options and called on the National Labor Relations Board to investigate the incident.
“In New York, the right to organize is codified into law, and any retaliatory action by management related thereto is strictly prohibited,” James said in a statement.
“At a time when so many New Yorkers are struggling and are deeply concerned about their safety, this action was also immoral and inhumane.”
Smalls, a dad of three who said he’d worked at Amazon five years, waved off the stated reason for his termination — claiming he was allowed to come into work for days after the company knew he’d been in contact with the worker who tested positive.
“I put employees at risk? No, you guys did that,” he said.
“They do this to people in a pandemic,” Smalls added. “What am I supposed to do now?”
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