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Bob Carey
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  US Economy and Credit Markets Ended Feb. 28, 2020
Posted Under: Weekly Market Commentary

 
Treasury prices rose dramatically over the course of the week as the Coronavirus spread throughout the world and fears of a global pandemic rose significantly. Over the previous weekend, there was a rapid rise of cases in Italy and South Korea. On Wednesday, a case of Coronavirus was diagnosed in California with no previous link to travel and 62 total cases were in the United States by the end of the week. This has led to fears that there will be significant supply chain disruption in the global economy and a large drop in production due to quarantines in China. By the end of the week there had been over 83,000 global cases and over 2,800 confirmed deaths. Altogether, this has led investors to seek the perceived safety of Treasurys as the 10-year Treasury yield set a record low of 1.149% on Friday. Investors now believe that the Federal Reserve will cut the Federal Funds Rate at the March 18th meeting. The market implied probably of a rate cut rose from 8% last week to 100% this week, with a 53% chance of multiple rate cuts. Federal Reserve Chairman Powell said that the virus "poses evolving risks to economic activity" and that the Fed would "act appropriately to support the economy." Major economic reports (related consensus forecasts, prior data) for the upcoming week include: Monday: February Final Markit US Manufacturing PMI (50.8, 50.8), January Construction Spending (0.6%, -0.2%), February ISM Manufacturing (50.5, 50.9); Wednesday: February 28 MBA Mortgage Applications (n/a, 1.5%), February ADP Employment Change (170k, 291k); Thursday: January Final Durable Goods Orders (n/a, -0.2%), January Factory Orders (n/a, -0.2%); Friday: January Trade Balance (-$48.0b, -$48.9b), February Change in Nonfarm Payrolls (175k, 225k), February Unemployment Rate (3.5%, 3.6%), January Final Wholesale Inventories MoM (n/a, -0.2%).
Posted on Monday, March 2, 2020 @ 8:11 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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