Rates Fall to October 2019 Lows Amid Coronavirus Fears

Treasurys jump higher to end the week, pulling rates down to October 2019 lows. Treasury yields and swap rates plummeted across the curve on Friday as global markets capitulated to coronavirus fears. There are now 17,485 total confirmed cases of the virus, 17,302 of those are in mainland China. While the economic impact of the outbreak is still unknown, Chinese oil demand is said to have dropped by 20%, pulling crude prices down significantly as a result as well. The 10-year Treasury yield closed down 8 basis points to 1.51%- the lowest level since October 2019.

Iowa caucus to determine official Democratic winner later today in first primary of 2020 elections. The first stop of the Democratic nomination race ultimately allocates 41 delegates to the winner (~1% of the total delegates at stake nationally) but the state holds outsize influence as it gives the winner needed momentum headed into the latter races. Bernie Sanders has surged into the lead in polls, but is closely trailed by Joe Biden. As soon as the Iowa caucus concludes, attention will turn to next Tuesday’s New Hampshire primary.

Day ahead. This morning, business surveys from countries like the US and China will provide an estimate of manufacturing activity. Due to easing trade tensions between the US and China, economists estimate that the data will remain relatively unchanged from the previous release. Atlanta Fed President Raphael Bostic will speak. Closing remarks in President Trump’s impeachment trial will be presented to the Senate.