Market Insights 2/13/2020

Markets traded cautiously today after China announced nearly 15,000 new cases of the coronavirus as a result of it tweaking its method for counting infections.

Treasury yields were lower, the dollar gained ground on most its major counterparts and gold rose.

The Markets…

The Dow Jones Industrial Average shed 128 points (0.4%) to 29,423

The S&P 500 was down 4 points (0.1%) to 3,376

The NASDAQ fell 14 points (0.1%) to 9,712

Volume was 817 million shares were traded on the NYSE and 2.2 billion shares changed hands on the NASDAQ

WTI oil rose $0.25 to $51.42 per barrel and wholesale gasoline was flat at $1.58 per gallon

The Bloomberg gold spot price rose $7.20 to $1,578.80 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was flat

Consumer inflation compared to last year hotter than expected, jobless claims below projections

The Consumer Price Index (CPI) ticked 0.1% higher month-over-month (m/m) in January, below the Bloomberg estimate calling for a match of December’s unrevised 0.2% gain. The core rate, which strips out food and energy, was 0.2% higher m/m, in line with expectations and compared to December’s unadjusted 0.1% increase. Y/Y, prices were 2.5% higher for the headline rate, above forecasts calling for a 2.4% gain and December’s unadjusted 2.3% increase. The core rate was up 2.3% y/y, north of projections of a 2.2% rise and matching December’s unrevised gain.

Weekly initial jobless claims rose by 2,000 to 205,000, versus estimates of 210,000, with the prior week’s figure being revised higher by 1,000 to 203,000. The four-week moving average was unchanged at 212,000, while continuing claims fell by 61,000 to 1,698,000, south of estimates of 1,734,000.

Treasuries were higher, with the yield on the 2-year declining fractionally to 1.44%, 10-year note’s yield shedding 2 basis point to 1.61%, and the 30-year bond rate dropping 2 bps to 2.07%.

Tomorrow will bring a reading on Import Prices, which are expected to cool a bit. Retail Sales are expected to show a 0.3% month-over-month increase. Industrial Production data is expected to show further contraction, but at a slower pace than in December. Capacity Utilization is expected to drop slightly to 76.8%. The University of Michigan Consumer Sentiment Index is expected to show consumers remain optimistic, but a bit less than in January.

Global equities mixed as well

China reported nearly 15,000 new virus cases as it revised its method for counting infections. The euro traded lower versus the greenback, while the British pound and Japanese yen gained ground. Global bond yields were mostly lower, outside of a notable jump in U.K. interest rates.

The U.K. FTSE 100 Index fell 1.1%, France’s CAC-40 Index decreased 0.2%, Spain’s IBEX 35 Index declined 0.3%, while Germany’s DAX Index and Switzerland’s Swiss Market Index were little changed, and Italy’s FTSE MIB Index ticked 0.1% higher.

Japan’s Nikkei 225 Index dipped 0.1%, with the yen finding some safe-haven demand, while South Korea’s Kospi Index declined 0.2%. China’s Shanghai Composite Index fell 0.7% and the Hong Kong Hang Seng Index decreased 0.3%. India’s S&P BSE Sensex 30 Index traded 0.3%. Australia’s S&P/ASX 200 Index managed to eke out a 0.2% gain.