Rates Plummet to Record Lows as Multiple States Report Highest Single-Day Virus-Related Deaths

 

Swap rates fall to record lows as sunbelt reports highest single-day increase in COVID-19 related deaths. California, Texas and Florida all reported their largest single-day increases in COVID-19 deaths since the start of the pandemic, sending risk assets and swap rates lower as a result. The VIX or “Fear Index” also rose- climbing above 30 after steadily dropping over the course of the last few weeks. This morning, risk assets and rates are lower once more, both 10-year and 5-year swap rates falling to all-time lows while the 10-year Treasury yield sits below 0.60%.

 

 

Vaccine trials continue to progress. Biotech company Moderna will be transitioning to their Phase 3 trials for their virus vaccine at the end of July. Infectious disease expert Dr. Anthony Fauci commented, “The early data on these trials have a cautious optimism that we will be successful at least in the developing a vaccine with some degree of efficacy by the end of the year, the beginning of 2021.” His comment comes as the pandemic continues to accelerate globally- US cases passing 3.05 million with deaths topping 132,000.

 

 

FX Friday. Thursday’s sessions saw the greenback clawing its way to some gains amidst pessimism on the economic recovery due to a continued uptick of coronavirus reports across southern states and California. The Yen also gained strength against most of the G-10 peers, while reaching a 2 week high against the dollar, touching 106.93 during Asia’s Friday trading session. In China, the more than week-long equity rally ran out of steam heading into the weekend, where investors reacted adversely to news of state-backed funds selling off portions of their holdings, to cap the end of the week. The PBOC ended up fixing the USD/CNY central parity rate just below the psychological 7.00 level, which is at its strongest level in 4 months. While history has shown China to side on keeping the Yuan level to be export friendly, the hands-off approach to this appreciation are potentially influenced by how weak the Yuan CFETs Index level has continued to trend downwards.