Daily Market Color

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 disease or deaths.” The Trump administration has requested $2.5 billion from Congress to spend on preventative virus measures. Stocks fell across the board yesterday, the Dow dropping over 1,000 points-its biggest decline in over 2 years. The 10-year Treasury yield fell 10+ basis points to 1.36%- 5 basis points away from its all-time low.



The Fed will remain patient in response to the outbreak. In her speech yesterday, Cleveland Fed President Loretta Mester reinforced the Fed’s current policy, stating that she was comfortable with its current posture and that “the coronavirus risk is hard to give a magnitude to.” Her sentiments were shared by Minneapolis Fed President Neel Kashkari. Fed Funds futures imply 2.5 rate cuts over the next year, but only a 14.3% likelihood of a rate cut at the next FOMC meeting on March 17-18th .



Day ahead. President Trump is still in India to discuss trade tensions with PM Modi. The Conference Board’s consumer confidence index is expected to rise by 1 to 132.6 from last month. Dallas Fed President Robert Kaplan and Fed Vice Chairman Richard Clarida are both speaking. The next Democratic debate will be held in South Carolina this evening.


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