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February 24, 2020

30-Year Treasury Yield Hits All-Time Low as Virus Spreads

 

Coronavirus cases have spiked in Italy and Iran. In China, the IMF cut the country’s annual growth forecast by 0.4%. For global manufacturers, the spread in South Korea could result in a negative impact. South Korean exports make up 44% of its yearly GDP, so the industry shutdown could face consequences similar to China. Central bankers and key finance officials from the Group of 20 warned that the virus poses a serious risk to global growth. In the meeting held in Riyadh, Saudi Arabia, officials agreed on...

February 21, 2020

Treasury Yields Continue to Fall as Virus Concerns Spread

 

Fresh concerns about the impact of the coronavirus are sweeping markets. There has been a recent spike in cases outside of China and new companies are reporting potential impacts on business. Investors are re-assuming a risk-off stance, flocking to haven assets like US Treasuries. The 30-year Treasury was 1 basis point away from its all-time low. Last August, Treasuries rallied due to recession fears and trade tensions. The 30-year bounced back to 2.44% in November and began sliding back down in January when...

February 20, 2020

Investor Flight to Safety Pushes 10-Year Treasury Yields Down

 

Risk-on rally pauses as coronavirus deaths spread beyond China. While Chinese authorities reported a declining number of new coronavirus cases, new evidence continues to emerge that the virus is spreading well beyond the Chinese province at the center of the outbreak, as two people from a cruise ship off Yokohama in Japan died from the virus, and South Korea reported its first fatality from the disease. Worries about the global spread of the virus along with lackluster corporate earnings reports triggered an...

February 19, 2020

Rates are Range-Bound as China Ramps Up Efforts to Stimulate Economy

 

China steps up efforts to bolster economy. . As coronavirus-related deaths passed 2,000 and confirmed cases neared 75,000, Chinese officials announced new measures to support its economy which is reeling from a virus-induced slowdown. Beijing is reportedly considering cash infusions or mergers for the airline industry which is suffering from a plunge in air travel. These latest moves follow a rate cut by the Peoples Bank of China earlier this week, intended to spur medium-term lending for banks. Corporates like...

February 18, 2020

Rates Fall as Concerns Over Economic Impact of the Coronavirus Deepen

 

Rates fall and stocks retreat on fears of economic fallout from coronavirus. Global stock markets retreated from record highs and government bond yields declined after Apple warned that it would miss Q1 sales forecasts, citing production and sales disruptions due to the coronavirus outbreak. Also weighing on sentiment was a larger-than-expected drop in a closely-watched barometer of German investor confidence, heightening worries that the manufacturing recession in Germany’s largest economy is deepening. Yields...

February 14, 2020

Rates Fall as Coronavirus Cases Jump

 

Coronavirus cases in China rise sharply. Infections rose to over 63,000 with the death toll at 1,380. Chinese officials amended the criteria for diagnosing the illness, spreading global uncertainty that the outbreak has not yet reached its peak. China has pledged to work with the WHO to be more transparent in their virus reports. In response, the PBOC is adding billions of dollars in liquidity to the market as an economic stimulus. Moody’s estimates that the virus has dropped China’s GDP by 0.2% at an annualized...

February 13, 2020

Haven Assets Rise as Coronavirus Cases Unexpectedly Climb

 

Rates fall across the curve amid surprise jump in coronavirus cases. Official cases of coronavirus in China jumped 15,000 overnight, bond yields and equity futures slipping lower as a result. The jump in official cases was associated with a change in measurement standards, and came largely from the capital city of Wuhan. Once that standard is rolled out nationally it’s broadly expected that the number of cases will continue climb higher. Fed Chair Jerome Powell touched on the risk the coronavirus poses to global...

February 12, 2020

Fed Chair Jerome Powell Expresses Optimism on Current US Economy

 

Fed Chair Jerome Powell sticks to the script in testimony before Congress, saying that current monetary policy remains appropriate. In his testimony on Tuesday, Powell said that the Fed continues to monitor the economic fallout from China’s coronarivus. Though it remains too soon to estimate the true economic effect of the outbreak, Powell assured Congress that current policy rates remained appropriate to sustain growth in the economy and labor market. Powell added that “the US economy in a very good place” and...

February 11, 2020

Markets Stabalize as Coronavirus Concerns Recede

 

Rates and risk assets rebound as coronavirus cases in China stabilize. Hubei province reported the lowest number of new coronavirus cases since the start of the month, although President Xi Jinping still voiced concerns about the outbreak’s economic toll. Bloomberg estimates the virus will drag down China’s GDP by 1.5% in the first quarter, but most economists are in agreement that the economy will rebound in the second half of the year. Yesterday, rates remained mostly rangebound- the 10-year Treasury yield...

February 10, 2020

Economic Impact of Coronavirus Worsens as Death Toll Surpasses 900

 

Coronavirus death toll rises to 900, more than 2003 SARS outbreak. Global cases have climbed to over 40,000- the vast majority of which are in China’s Hubei province. With many of China’s cities in complete shutdown, the economic impact of the outbreak continues to deepen as global supply chains are disrupted. Nissan, the Japanese care maker, has become the latest example of that disruption as it suspends production due to a shortage in car components sourced from China. While equity markets have by in large...

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