US Economy and Credit Markets Ended March 13, 2020

Bob Carey
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US Economy and Credit Markets Ended March 13, 2020

Posted Under: Weekly Market Commentary

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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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.

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