Reports that the White House will announce a historic release of strategic oil reserves has oil prices down 6% on the day and yields 1-4 basis points lower across the Treasury curve. The Biden administration is considering a release of close to 1 million barrels of oil per day for several months, potentially as much as 180 million barrels in total, to combat higher gas prices, which would be by far the largest release of U.S. reserves in history. Treasuries are also receiving a boost today from month-end rebalancing trades, which are expected to be more substantial given the significant amount of market value erased in the bond market during the March sell-off.
The February PCE inflation report was largely in line with expectations, but personal spending growth over the month missed to the downside. Spending was up 0.2% in February (0.5% expected), and adjusted for inflation, spending was down 0.4% (-0.2% expected). Spending on services was still strong in February, but spending on durable goods was down 2.45%. The most obvious conclusion that media headlines are suggesting is that inflation is beginning to suppress consumer spending, but it’s still a little early to tell.
Jason Haley
Chief Investment Officer
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