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Bob Carey
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  US Economy and Credit Markets Ended March 13, 2020
Posted Under: Weekly Market Commentary
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Last week was a historic week in global markets. Fixed Income was not immune to large price swings as world markets responded to a global pandemic. Notably, the yield on 30-year treasury bonds fell below 1% for the first time ever. Monday of last week saw 10- year yields close at 0.501% and 30- year yields close at 0.938%. These are both low absolute yields and represent a startingly flat yield curve. These low yields are indicative of high prices as bonds benefit from increased safe asset demand.Oil markets digested both a supply shock as Saudi Arabia's state oil production announced plans to cut prices and potentially unleash supply increases and a demand shock as global forecasts for oil demand have declined with lowered economic activity resulting from responses to COVID-19. Suprisingly, though a safe-haven asset, Gold declined 4 of 5 days last week as deflationary expectations took hold. On Sunday, the United States Federal Reserve agreed to a surprise interest rate cut. The Federal Reserve cut its benchmark rates by 100 basis points to a range of zero to 0.25% and announced a new round of Quantitative Easing. Major economic reports (related consensus forecasts, prior data) for the upcoming week include Monday: March Empire Manufacturing (5.0, 12.9); Tuesday: February Retail Sales Advance (0.2%, 0.3%) and February Industrial Production (0.4%, -0.3%); Wednesday: March 13 MBA Mortgage Applications (N/A, 55.4%), FOMC Rate Decision Upper Bound (0.75%), FOMC Rate Decision Lower Bound (0.50%); Thursday: March 14 Initial Jobless Claims (219K, 211K) and February Leading Index (0.1%, 0.8%); Friday: February Existing Home Sales (5.51M, 5.46M).
Posted on Monday, March 16, 2020 @ 8:05 AM • Post Link Share: 
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