Report to the Secretary of the Treasury from the Treasury Borrowing Advisory Committee

Letter to the Secretary Dear Mr. Secretary, After a period of heightened market volatility in early April, financial markets have stabilized over the last three months, reflecting increasing comfort regarding the outlook for the US and global economy. The S&P 500 index recovered from sharp declines in early April and is now up more than 8% since the start of the year following progress on trade agreements. Treasury yields have been relatively stable over the last three months, with ten-year Treasury yields in a range around 4.4% and two-year Treasury yields averaging about 3.9%. After a more rapid depreciation in early April, the broad trade-weighted US dollar has continued to weaken, but at a slower rate, totaling an 8% depreciation over the course of the year. Measures of implied asset price volatility that had been elevated have fallen back to low levels.