Daily Market Color February 8, 2016Signs of Global Slowdown Spur Flight to Quality Trade Despite China markets being closed this week in celebration of the Chinese New Year, the rest of the global stock markets declined Monday, while investors piled into Treasuries, gold and other safe havens off the back of continued concerns over the health of the global economy. Part of the negative sentiment could be attributed to a third straight day of pressure on oil prices. Data last week showed US crude and gasoline inventories hit record highs, and a weekend meeting between Saudi Arabia and Venezuela did little to boost confidence that OPEC members will soon reach an agreement to cut production. Morgan Stanley said it will likely take until at least 2017 before the global supply overhang begins to clear, but some market-participants believe even that may be too optimistic. Both Iraq and Iran intend to ramp up production, and the CEO of Swiss oil company Vitol said he sees oil prices depressed for the next 5 to 10 years. There are few significant data releases this week (and none today), but markets will pay close attention to Fed Chair Yellen’s semi-annual testimony to the House Financial Services Committee on Wednesday. Mixed data in recent weeks makes it more difficult to predict the tone of Yellen’s testimony, but it seems unlikely she would increase the speculation around a March interest rate hike given the heightened market volatility and generally tighter financial conditions since the December hike. So far today US Treasury and swap yields are down 4-8 bps across the curve, while the S&P 500 and WTI crude are both down close to 2%, while gold is up 2% for the day, and 12.5% YTD.