Rates Fall as President Trump Promotes Booming American Economy in Davos

 

A SARS-like virus has broken out in China. While the virus appears to be less contagious than the SARS virus, it has similar respiratory effects on humans and has infected 291 people, killing 6. The market impact of the outbreak has yet to be seen, but concerns around China’s ability to contain the various on the eve of the popular lunar holiday led several Chinese pharmaceutical companies to rise by 10% (the maximum daily limit) yesterday. Markets are shifting to a risk-off stance as these concerns have led global stocks and commodities to drop while safe-haven assets boom. Futures correlated with the Dow Jones Industrial Average decreased 0.2% along with the Stoxx Europe 600 index dropping 0.4%.

 

 

President Trump attends the Global Economic Forum in Davos as his impeachment trial begins in Washington. Accompanied by leaders from around the world, Trump continues to promote his accustomed “America-first” rhetoric at the Swiss gathering, tweeting that “The American dream is back, bigger, better, and stronger than ever before.” The majority of the president’s remarks at the summit focused on the booming American economy and his track record of delivering benefits to the middle class. The hot topic for this year’s meeting is climate change, as activist Greta Thunberg spurs discussions on “real-zero” carbon emissions. As trade tensions with multiple countries like China and France have eased, general global sentiment for the US economy is positive. This morning, the US 10-year Treasury yield has dipped 3 basis points to 1.79%.

 

 

Day ahead. This morning the Bank of Japan announced its quarterly economic outlook and policy decision, keeping its monetary policy unchanged (matched market forecasts). Netflix and United Airlines are among the companies reporting their earnings today.