Daily Market Color February 28, 2020Yields Fall to New Lows Amid Virus Concerns Fears over coronavirus impact on GDP, company earnings drive rates to all-time lows. Rates fell for the 6th day in a row yesterday as accelerating concerns around the coronavirus pushed both stocks and rates lower. The 10-year Treasury yield fell 8 basis points on the day to 1.26% while the S&P 500 fell 4.4% (marking the fastest equity market correction in recent history). Despite the dramatic market reaction, China actually reported only 327 new cases yesterday, which is the lowest number of new infections since mid-January. Rates are lower once again this morning, the 2-year Treasury yields falling below 1% while 10-year yields sit at 8 basis points lower at 1.19%. Fed officials remain noncommittal on changes in monetary policy. Chicago Fed President Charles Evans said yesterday that “we are monitoring [the coronavirus outbreak] very closely and if we see something that does require an adjustment, I’m confident we would give that all the consideration it needs.” Despite the Fed’s messaging, Fed Funds futures are pricing in a 100% likelihood of a rate cut at the FOMC’s 03/18/2020 meeting, and 3.5 rate cuts by the end of the year. Day ahead. This morning, US personal spending and income numbers reported a 0.2% and 0.6% increase respectively. St. Louis Fed President James Bullard will provide his take on monetary policy and the current economic outlook. China’s official manufacturing index for February will be released this evening.