U.S. government debt prices were higher Thursday morning after the Federal Reserve offered a dour forecast for the economy in the wake of the coronavirus crisis.
The Fed’s policymakers voted unanimously to hold the federal funds target rate at 0%-0.25% range and the central bank projected no hikes through 2022.
The Fed also projected an economic contraction of 6.5% in 2020, after months of stymied business activity due to coronavirus-induced lockdowns, with the unemployment rate expected to be 9.3% by year-end.
However, the central bank sees GDP (gross domestic product) growth rebounding 5% in 2021 and a further 3.5% in 2022, and vowed to support the U.S. economy on the “long road” to recovery.
The coronavirus pandemic remains on investors’ radar, with confirmed infections in the U.S. now exceeding 2 million and several areas of the country reporting spikes following the reopening of their economies.
The U.S. Food and Drug Administration (FDA) said Wednesday that it is seeking fast reviews of various Covid-19 treatments and tests for emergency clearance.
Last week’s jobless claims figures are expected at 8:30 a.m. ET Thursday. New filings for the week ended June 5 are projected to come in at 1.5 million, after 1.877 million Americans filed claims the previous week, signaling that the worst of the unprecedented layoffs resulting from the pandemic is over.
May’s PPI (producer price index) inflation readings are also due at 8:30 a.m. ET.
Auctions will be held Thursday for $70 billion of 4-week Treasury bills, $60 billion of 8-week bills and $19 billion of 30-year bonds.