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March 9, 2020

10-Year Treasury Heads into Uncharted Territory Below 0.5%

 

10-year yield falls below 0.50% as coronavirus fears and falling crude prices combine to increase demand for haven assets. For the the first time in US history the entire yield curve sits under 1%. As virus cases continue to grow, President Trump’s administration is attempting to curb the spread by implementing a temporary expansion of paid sick leave and relieving financial stress faced by some companies. Meanwhile, the New York Fed pledged to increase repo operations this week to “ensure reserved remain ample...

March 6, 2020

10-Year Treasury Slips Below 0.7% Amid Virus Fears

 

The 10-year Treasury yield fell below 0.7% for the first time. The economic impact of the virus continues to concern global investors, leading to growing demand for safe haven assets. The number of confirmed cases in the US grows by the day, especially in hubs like New York and Seattle. Yesterday, Dallas Fed President Robert Kaplan stressed the importance of these cases in his policy decision when he votes in the March FOMC meeting. Kaplan mentioned that “We’re just going to have to see what the actual...

March 5, 2020

Market Volatility Continues as Virus Spreads in the US

 

Market volatility continues as coronavirus spreads. Coronavirus cases continue to spread in the US, overall infections rising to 159 (led by 31 cases in the city of Seattle). The true economic impact of the virus on global growth remains unknown, but some estimates for virus-stricken countries like China have called for a double digit recession in Q1, followed by a quick “v-shaped” recovery later in the year. Markets have continued to whipsaw in response to fears around the virus, the S&P 500 and Dow Jones...

March 4, 2020

Fed Issues Emergency Rate Cut in Response to Coronavirus

 

The Fed issued an emergency rate cut. Yesterday, the Fed surprised markets by executing a 0.50% cut to its benchmark borrowing rate in an attempt to counteract the coronavirus effects on the economy -- this is the first time since the 2008 crisis that the Fed has changed rates between FOMC meetings. The current target fed funds range now sits at 1-1.25%. Equities slid and the 10-year Treasury yield dipped below 1% for the first time in history as investors sought safety in haven assets. Global supply chain...

March 3, 2020

Rates Fall as G7 Statement Disappoints, Attention Turns to Central Banks

 

Central banks signal they will support markets through rate cuts and other policy tools. Bond yields in the US and Europe are lower this morning after the ECB, the Fed, and the BOJ hinted at a potential rate cut to counteract the virus impact. Futures markets are pricing in a 0.5% rate cut at the next FOMC meeting, moving the target range to 1-1.25%. Yesterday’s ISM manufacturing index figures barely landed in the expansionary range which could indicate lower numbers in the future. Recent factory employment...

March 2, 2020

Chair Powell Signals the Fed Could Cut Rates

 

Risk assets and rates tumble as coronavirus fears grip markets. The virus has continued to spread with a second confirmed death in the US – the global death toll rising to 3,000. Large cities like New York and Berlin reported first cases. The Organization for Economic Cooperation and Development estimates that the US economy will at grow 2.4% instead of 2.9% in a “best case” scenario. The White House has allocated $2.5 billion in funds to address the virus damage, but concerns are growing that not enough is being...

February 28, 2020

Yields Fall to New Lows Amid Virus Concerns

 

Fears over coronavirus impact on GDP, company earnings drive rates to all-time lows. Rates fell for the 6th day in a row yesterday as accelerating concerns around the coronavirus pushed both stocks and rates lower. The 10-year Treasury yield fell 8 basis points on the day to 1.26% while the S&P 500 fell 4.4% (marking the fastest equity market correction in recent history). Despite the dramatic market reaction, China actually reported only 327 new cases yesterday, which is the lowest number of new infections...

February 27, 2020

Yields Across the Curve Continue to Fall to Record Lows Amid Virus Concerns

 

The coronavirus continues to push US Treasury yields down. Nearly half of the US companies located in China forecast substantial revenue decreases this year if usual business practices do not resume by April. Moody’s analysts expect the virus to reduce China’s annual GDP by 1% down to 5.4%. Companies like Microsoft, Marriott, Nestle, and Lufthansa are at the crux of the crisis. These global fears are exacerbated by the identification of the first virus case in the US where the person has no ties to an existing...

February 26, 2020

10-Year Treasury Yield Dipped to All-Time Low as Virus Spreads

 

The 10-year Treasury touched all-time lows yesterday amid virus concerns. The CDC published a report urging US citizens to prepare for the eventual outbreak of the coronavirus in the United States, sending the 10-year yield tumbling as low as 1.305% as investors flocked to haven assets. The Dow Jones Industrial Average and S&P 500 each falling over 3% on the day. Despite the volatility, the head of the IMF warned countries not to overreact to the threats. US Fed Vice Chair Richard Clarida echoed that...

February 25, 2020

10-Year Treasury Yield Nears All-Time Low as Virus Spreads

 

Coronavirus fears continues to spread despite a reduction in infection rate. The WHO has now reported a total of 79,331 confirmed cases in 28 countries- Goldman Sachs research projecting a 0.8% hit to US growth in Q1 due to supply chain and tourism disruptions. Despite this large number of cases, the WHO refuses to declare the virus a global pandemic-director General Tedros Adhanom Ghebreyesus citing, “we are not witnessing the uncontained global spread of this virus and we are not witnessing large-scale severe...

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