Category Archives: Daily Insights

Market Insights 4/7/2020

U.S. equities finished modestly lower in a rocky session that saw a 700-point swing in the Dow, as the optimism over a flattening of the COVID-19 pandemic’s curve that sparked yesterday’s rally was tempered by news of a large increase in deaths out of New York related to virus. .

Treasury yields were mostly higher as bond prices fell, while the U.S. dollar was sharply lower and gold lost ground.

Crude oil prices declined with attention on whether OPEC+ will deliver production cuts and if Russia and Saudi Arabia can end their price war.

The Markets…

The Dow Jones Industrial Average fell 26 points (0.1%) to 22,654

The S&P 500 Index declined 4 points (0.2%) to 2,659

The Nasdaq Composite lost 26 points (0.3%) to 7,887

In heavy volume, 1.4 billion shares were traded on the NYSE and 4.0 billion shares changed hands on the NASDAQ

WTI crude oil shed $2.45 to $23.63 per barrel and wholesale gasoline was down $0.05 at $0.65 per gallon

The Bloomberg gold spot price was $3.30 lower at $1,657.67 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—lost 0.8% to 99.88

Small business optimism falls, job openings dip, Treasury yields mostly higher

The National Federation of Independent Business (NFIB) Small Business Optimism Index for March fell to 96.4, from February’s 104.5 level. This was the largest monthly decline in the survey’s history and the index hit the lowest level since October 2016. The NFIB said nine of the ten index components declined, which is evidence that economic disruptions are escalating on Main Street as small businesses struggle to keep their doors open.

The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS), a measure of unmet demand for labor, declined by a smaller amount than expected to 6.88 million jobs available to be filled in February, from January’s upwardly-revised 7.01 million figure and above forecasts calling for 6.50 million. The report showed the hiring rate remained at January’s 3.9% rate and separations dipped to 3.6% from 3.7%.

Treasuries were mostly lower, as the yield on the 2-year note was flat at 0.27%, while the yield on the 10-year note gained 4 basis points to 0.72%, and the 30-year bond rate gained 2 bps to 1.31%.

Tomorrow’s economic calendar will be light, offering only MBA Mortgage Applications and the minutes from the Fed’s emergency March 15th policy meeting.

Europe and Asia higher amid positive signs regarding coronavirus war

European equities finished higher for a second day, extending a recent bounce on continued optimism that the COVID-19 pandemic may be leveling off following early positive signs out of hot spots in New York, Italy and Spain. Moreover, further signs suggesting the original epicenter of China, along with South Korea, continue to recover appeared to also add to the positive tone in the markets.

The U.K. FTSE 100 Index and Italy’s FTSE MIB Index were up 2.2%, France’s CAC-40 Index advanced 2.1%, Spain’s IBEX 35 Index rose 2.3%, Germany’s DAX Index rallied 2.8%, and Switzerland’s Swiss Market Index gained 0.6%.

Stocks in Asia mostly rallied, with markets in China and India returning to action following yesterday’s holiday breaks, amid continued global optimism that the war against the COVID-19 pandemic may be turning a positive corner. With new cases and death tolls appearing to ease in hot spots out of the U.S. and Europe, China reported no new deaths for the first time since January and South Korea continued to see its new case rate decelerate.

Japan’s Nikkei 225 Index gained 2.0%, despite some late-day strength in the yen, potentially aided by February data showing household spending fell by a much smaller amount than projected and earnings figures were stronger than forecasted. China’s Shanghai Composite Index and the Hong Kong Hang Seng Index both advanced 2.1%, while India’s S&P BSE Sensex 30 Index surged 9.0% and South Korea’s Kospi Index increased 1.8%.

Market Insights 4/6/2020

U.S. equities began the week on a solid high note amid some welcome optimism that the coronavirus curve could be flattening.

Crude oil prices were lower as the scheduled meeting between OPEC and its allies was delayed, but hopes remain high that Saudi Arabia and Russia may be able to strike a deal to end their price war.

Treasuries lost ground, with yields rising, amid a dormant economic calendar, while gold and the U.S. dollar were higher.

The Markets…

The Dow Jones Industrial Average soared 1,627 points (7.7%) to 22,680

The S&P 500 Index advanced 175 points (7.0%) to 2,664

The Nasdaq Composite jumped 540 points (7.3%) to 7,913

In moderately heavy volume, 1.4 billion shares were traded on the NYSE and 3.8 billion shares changed hands on the NASDAQ

WTI crude oil fell $2.26 to $26.08 per barrel and wholesale gasoline was up $0.01 at $0.70 per gallon

The Bloomberg gold spot price was $42.35 higher at $1,663.16 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—gained 0.2% to 100.79

Treasury yields rise as equities surge to kick off shortened week

Treasuries lost ground amid a dormant economic calendar while the markets continued to grapple with the festering COVID-19 pandemic uncertainty and the coinciding spike in unemployment, along with the massive amounts of fiscal and monetary policy responses. The yield on the 2-year note rose 6 basis points (to 0.27%, the yield on the 10-year note was up 8 bps at 0.67% and the 30-year bond rate advanced 5 bps to 1.27%.

This week, although shortened by the Good Friday holiday, on which the U.S. markets will be closed, volatility is likely to continue amid the coronavirus uncertainty and as jobless claims is set to headline the economic docket. Bloomberg is projecting another surge, this time 5.0 million of initial unemployment claims for the week ended April 4th.

Europe and Asia rebound as pandemic appears to slow in Europe

European equities finished broadly higher, with global sentiment seeming to get a boost from signs that the severity of the coronavirus in key portions of the region, such Italy and Spain, may be softening, along with early indications that cases in the epicenter of New York might have reached the apex. However, volatility is likely to remain elevated as uncertainty continues to be prevalent regarding the depth and duration of the pandemic’s economic and social disruption.

The U.K. FTSE 100 Index was up 3.1%, France’s CAC-40 Index gained 4.6%, Germany’s DAX Index rallied 5.8%, Spain’s IBEX 35 Index and Italy’s FTSE MIB Index increased 4.0%, and Switzerland’s Swiss Market Index advanced 2.4%.

Stocks in Asia bounced noticeably to kick off the week, though volume was lighter than usual with markets in China and India closed for holidays. The solid advance comes as global sentiment appears to be finding some relief as Europe showed some signs of a deceleration in coronavirus cases, while the epicenter of New York may have seen the intensity of the outbreak also soften somewhat.

Japan’s Nikkei 225 Index jumped 4.2%, with the yen losing some ground late in the session, and despite a report showing Japanese consumer confidence fell in March. South Korea’s Kospi Index rallied 3.9% and the Hong Kong Hang Seng Index advanced 2.2%. Australia’s S&P/ASX 200 Index surged 4.3%, ahead of tonight’s monetary policy decision from the Reserve Bank of Australia.

Market Insights 4/1/2020

U.S. stocks finished solidly lower, as uncertainty has swelled surrounding the economic and social impact of the coronavirus pandemic, with yesterday’s warning from President Trump of a “painful” two weeks ahead exacerbating sentiment.

The U.S. is expected to enter a rough patch enroute to the eye of the storm, while tolls in Europe continue to ramp up. U.S. manufacturing output contracted, but at a smaller-than-expected pace to cap off a slew of reads from across the globe, which also showed that China surprisingly returned to expansion, but activity contracted in Europe and the U.K.

Treasury yields were mostly lower, and crude oil prices came under renewed pressure, while the U.S. dollar and gold were higher.

Europe finished with widespread losses, while Asia was mostly lower with Australian markets bucking the trend.

The Markets…

The Dow Jones Industrial Average tumbled 974 points (4.4%) to 20,944

The S&P 500 Index plunged 114 points (4.4%) to 2,471

The Nasdaq Composite fell 340 points (4.4%) to 7,361

In moderately heavy volume 1.3 billion shares were traded on the NYSE and 3.7 billion shares changed hands on the NASDAQ

WTI crude oil fell $0.17 to $20.31 per barrel and wholesale gasoline was down $0.04 at $0.55 per gallon

The Bloomberg gold spot price increased $13.14 to $1,590.32 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.4% higher at 99.47

U.S. stocks began the second quarter under pressure after registering the worst first quarter on record and posting a quarterly drop only rivaled by periods in the Depression era in the 1930s and the Global Financial Crisis of 2008.

The markets continued to be hampered by uncertainty regarding the depth and duration of the economic and social shocks associated with the unprecedented COVID-19 (coronavirus) pandemic, which has fostered a self-imposed shutdown of the global economy and embrace of social distancing in an attempt to mitigate the spread of the coronavirus.

Stocks had seen a noticeable rebound over the past week as U.S. lawmakers have deployed a massive amount of fiscal stimulus measures, reciprocated by a drastic monetary policy response from the Federal Reserve, while developments out of the healthcare sector have delivered hopes of potential expedited detection and treatment of the virus.

However, the U.S. is now the epicenter of the pandemic and has yet to reach the apex of the outbreak as new cases and death tolls continue to rise and President Donald Trump has warned that the next couple weeks will be painful, and the markets continue to grapple with whether the recent rebound is a countertrend move.

Manufacturing output contracts at slower paces than expected, ADP job report tops forecasts

The March Institute for Supply Management (ISM) Manufacturing Index dipped to 49.1 from February’s unrevised 50.1 level. The ISM said comments from the survey were negative regarding the near-term outlook, with sentiment clearly impacted by the coronavirus pandemic and energy market volatility.

The final Markit U.S. Manufacturing PMI Index was revised lower to 48.5 for March, versus expectations to be adjusted to 48.0 from the preliminary estimate of 49.2, and below February’s 50.7 level. A reading below 50 denotes contraction. The release is independent and differs from ISM’s report, as it has less historic value and Markit weights its index components differently, while it surveys a wider range of companies.

The ADP Employment Change Report showed private sector payrolls fell by 27,000 jobs in March, better than the Bloomberg forecast of a 150,000 drop, while February’s increase of 183,000 jobs was revised to a 179,000 rise. However, ADP noted that the March data did not reflect the full impact of the coronavirus pandemic.

Today’s ADP data, which does not include government hiring and firing, comes ahead of Friday’s broader March non-farm payroll report, expected to show jobs fell by 100,000 and private sector payrolls dropped by 123,000. The unemployment rate is forecasted to rise to 3.8% from 3.5% and average hourly earnings are projected to rise 0.2% month-over-month, and remain 3.0% higher y/y.

The MBA Mortgage Application Index rose by 15.3% last week, following the prior week’s 29.4% plunge. The gain came as a 25.5% surge in the Refinance Index more than offset a 10.8% fall for the Purchase Index. The average 30-year mortgage rate tumbled 35 basis points to 3.47%.

Treasuries rose with the markets grappling with the festering COVID-19 pandemic uncertainty and massive amounts of fiscal and monetary policy responses, including yesterday’s new temporary repurchase agreement facility for foreign and international monetary authorities, known as the FIMA Repo Facility. The yield on the 2-year note was flat at 0.24%, the yield on the 10-year note dropped 8 bps 0.62%, and the 30-year bond rate fell 9 bps to 1.27%.

More timely employment data will grace tomorrow’s economic calendar, courtesy of weekly initial jobless claims, forecasted to rise to a level of 3.5 million following last week’s 3.3 million surge, while other reports of note include factory orders for February, expected to inch 0.2% higher m/m, as well as the trade balance, with economists projecting the deficit narrowed in February to $40.0 billion from the $45.3 billion registered in January.

Europe tumbles as pandemic impact intensifies

European equities were broadly lower, as the second quarter began with the financial sector continuing to see pressure. The toll of the coronavirus pandemic continues to intensify and weighed on the markets, with the U.S. heading into the eye of the storm, while cases and deaths continue to rise in Spain, France, Germany and the U.K. Italy remains in critical condition even as recent data has provided some encouragement regarding the potential slowing of the pace of the outbreak.

The U.K. FTSE 100 Index was down 3.8%, France’s CAC-40 Index dropped 4.3%, Germany’s DAX Index fell 3.9%, Spain’s IBEX 35 Index and Italy’s FTSE MIB Index decreased 3.0%, and Switzerland’s Swiss Market Index declined 1.5%.

Stocks in Asia finished mostly lower to begin the second quarter after a rough first quarter that was severely impacted by the COVID-19 pandemic, with uncertainty regarding the depth and duration of the global impact remaining high as the U.S. has yet to hit the pinnacle of the outbreak.

Japan’s Nikkei 225 Index fell 4.5%, with the yen gaining ground and the Q1 Tankan Large Manufacturing Index falling by a smaller amount than expected but reaching the lowest level since March 2013. China’s Shanghai Composite Index declined 0.6% and the Hong Kong Hang Seng Index dropped 2.2%, with banking stocks weighing on the markets even as the Caixin PMI Manufacturing Index surprisingly returned to a level depicting expansion for March, mirroring yesterday’s manufacturing and services report from the government. South Korea’s Kospi Index tumbled 3.9% and India’s S&P BSE Sensex 30 Index plummeted 4.1%.

Market Insights 3/30/2020

U.S. stocks extended last week’s sharp rally amid the backdrop of the massive amount of fiscal and monetary policy stimulus measures to combat the severe disruption of the COVID-19 pandemic.

Treasury yields were mixed, gold and crude oil prices finished lower, though the U.S. dollar rebounded. Asia traded mixed and Europe overcame early pressure and finished mostly higher.

The Markets…

The Dow Jones Industrial Average gained 691 points (3.2%) to 22,327

The S&P 500 Index rose 85 points (3.4%) to 2,627

the Nasdaq Composite advanced 272 points (3.6%) to 7,774

In moderately heavy volume 1.2 billion shares were traded on the NYSE and 3.8 billion shares changed hands on the NASDAQ

WTI crude oil declined $1.42 to $20.09 per barrel and wholesale gasoline was up $0.01 at $0.61 per gallon

The Bloomberg gold spot price decreased $6.35 to $1,621.80 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.7% higher at 99.03

Housing data positively surprises, regional manufacturing plunges, Treasury yields decline

Pending home sales gained 2.4% month-over-month in February, versus the Bloomberg projection of a 1.8% decline, and following the upwardly-revised 5.3% rise registered in January. Sales were 11.5% higher y/y, compared to the expected 6.5% gain. Pending home sales reflect contract signings and are a gauge of the pipeline of existing home sales.

Treasuries finished mixed as the heightened volatility continued, with the markets grappling with the COVID-19 pandemic uncertainty, the passing of the “phase three” fiscal deal and the Fed’s ramped-up stimulus measures. The yield on the 2-year note dipped 1 basis point to 0.23%, while the yield on the 10-year note rose 3 bps to 0.70%, and the 30-year bond rate gained 6 bps to 1.32%.

The March Dallas Fed Manufacturing Index dropped dramatically back into contraction territory (a reading below zero) as the coronavirus disruption accelerated, plunging to -70.0 from 1.2 in February, and well below expectations of -10.0. Production suggested a notable contraction and new orders fell to the lowest reading since March 2009 during the Great Recession, while the contraction in employment accelerated sharply.

Europe mostly higher as another volatile week unfolds, Asia finished mixed

European equities overcame early pressure and finished mostly higher, with the financial sector declining but the U.S. markets extending last week’s sharp rally. Volatility continued as the global markets remain uncertain regarding the impact of the coronavirus pandemic. The U.S. has extended the CDC’s social distancing guidelines, while Italy, France and Spain remain in critical condition as the virus continues to spread and foster lockdowns in the countries.

The markets digested the massive amounts of global fiscal and monetary policy stimulus actions and grappled with the potential effectiveness of such measures in combating the severe economic and social disruption of the pandemic. The euro and British pound saw pressure versus the U.S. dollar and bond yields in the region finished mixed.

The U.K. FTSE 100 Index was up 1.0%, France’s CAC-40 Index rose 0.6%, Germany’s DAX Index gained 1.9%, Italy’s FTSE MIB Index increased 0.3%, and Switzerland’s Swiss Market Index advanced 2.0%, while Spain’s IBEX 35 Index dropped 1.7%.

Stocks in Asia finished mixed but tilted toward the downside as the global markets continue to focus on the elevated uncertainty regarding the impact of COVID-19 and the massive amount of stimulus measures deployed from fiscal and monetary policy standpoints.

The U.S. is leading the way, while China announced its latest measures, cutting the interest rate on seven-day reverse repurchase agreements and an injection of billions of dollars into the banking sector and Japanese Prime Minister Abe said over the weekend that the country is set to unveil its biggest-ever stimulus measures, per Bloomberg, to battle the virus.

The markets remained skittish, with Japan’s Nikkei 225 Index declining 1.6%, as the yen continued to climb, while India’s S&P BSE Sensex 30 Index dropped 4.6%. China’s Shanghai Composite Index declined 0.9% and the Hong Kong Hang Seng Index fell 1.3%. Australia’s S&P/ASX 200 Index rallied 7.0%, led by strength in the banking sector, and South Korea’s Kospi Index finished little changed.

Market Insights 3/26/2020

U.S. stocks recorded the first three-day winning streak since the COVID-19 pandemic began to decisively disrupt the global markets.

Equities reversed to the upside in pre-market trading shortly after data showed a spike to a record high in jobless claims, suggesting a bigger surge may have been feared. The resiliency was also likely fueled by the massive fiscal and monetary policy measures from Congress and the Federal Reserve recently, possibly cooling concerns about the increased likelihood of a sharp economic downturn as the support could shorten the duration of the damage.

Last night, the Senate approved a $2.0 trillion “phase three” fiscal package that is heading for the House as soon as tomorrow, while the Fed earlier this week unloaded a drastic amount of monetary policy support. Treasury yields were lower, crude oil prices fell and the U.S. dollar continued to give back a recent jump, while gold was higher.

The Markets…

The Dow Jones Industrial Average jumped 1,352 points (6.4%) to 22,552

The S&P 500 Index surged 155 points (6.2%) to 2,630 and

The Nasdaq Composite rallied 413 points (5.6%) to 7,798

In heavy volume 1.6 billion shares were traded on the NYSE and 3.9 billion shares changed hands on the NASDAQ

WTI crude oil dropped $1.89 to $22.60 per barrel and wholesale gasoline was off $0.01 at $0.60 per gallon

The Bloomberg gold spot price advanced $13.97 to $1,630.86 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—tumbled 1.7% to 99.31

Jobless claims surge amid the coronavirus pandemic, Q4 GDP unrevised

Weekly initial jobless claims spiked by 3,001,000 to a record of 3,283,000, well above the Bloomberg estimate of 1,700,000, from the prior week’s upwardly-revised 282,000 level. The four-week moving average jumped by 765,750 to 998,250, while continuing claims rose by 101,000 to 1,803,000, north of estimates of 1,791,000. A dramatic rise in unemployment claims was anticipated, given the unfolding COVID-19 crisis.

The final look (of three) at Q4 Gross Domestic Product (chart), the broadest measure of economic output, showed a quarter-over-quarter annualized rate of growth of 2.1%, unrevised from the first revision to match the Bloomberg consensus forecast and Q3′s rate. Personal consumption was upwardly revised to a 1.8% increase, versus expectations for it to remain at a 1.7% gain. Q3 consumption was unrevised at a 3.2% rise.

On inflation, the GDP Price Index was unrevised at a 1.3% increase, matching estimates, while the core PCE Index, which excludes food and energy, was adjusted to a 1.3% increase, versus forecasts to be unrevised at a 1.2% gain.

Treasuries rose as the extreme volatility continued, with the markets grappling with the COVID-19 pandemic uncertainty—and the coinciding spike in unemployment—the passing of the “phase three” fiscal deal and the Fed’s record stimulus measures. The yield on the 2-year note declined 5 basis points (bps) to 0.29%, the yield on the 10-year note fell 4 bps to 0.83%, and the 30-year bond dropped 3 bps to 1.42%.

Tomorrow, the economic week will conclude with a couple reads on activity and sentiment from the all-important U.S. consumer. February personal income and spending will get the ball rolling, expected to show the former rose 0.4% m/m, registering a seventh-consecutive monthly increase, and the latter post a second-straight month of 0.2% growth. The report will be followed by the final University of Michigan Consumer Sentiment Index for March, forecasted to be revised lower to an eight-month low of 90.0, and down solidly from the 101.0 level recorded in February.

Asia mixed, Europe reverses higher

European equities overcame early losses and finished to the upside, aided by the U.S. markets rallying in the face of the highly-anticipated spike in unemployment claims. The resiliency seemed to come partly due to relief regarding the flood of fiscal and monetary policy measures deployed by global central banks and governments, led by the U.S.

The Bank of England today left its benchmark interest rate and bond purchasing program unchanged after two emergency meetings this month led to a record low interest rate and increased bond purchases. The euro and British pound gained ground on the U.S. dollar, and bond yields in the region fell.

The U.K. FTSE 100 Index was up 1.5%, France’s CAC-40 Index rallied 2.5%, Germany’s DAX Index and Spain’s IBEX 35 Index rose 1.3%, Italy’s FTSE MIB Index rose 0.7%, and Switzerland’s Swiss Market Index moved 2.4% to the upside.

Stocks in Asia finished mixed on the heels of a broad two-day rally that had been fueled by some signs that the economy and life in the region may be getting on the road to relative normalcy, along with the massive global monetary and fiscal policy responses, notably out of the U.S.

Japan’s Nikkei 225 Index fell 4.5%, with the yen showing noticeable strength late in session, and South Korea’s Kospi Index dropped 1.1%. China’s Shanghai Composite Index declined 0.6% and the Hong Kong Hang Seng Index traded 0.7% to the downside. However, India’s S&P BSE Sensex 30 Index gained back some of Monday’s record drop, rallying 4.9%, and Australia’s S&P/ASX 200 Index advanced 2.3%.

Market Insights 3/23/2020

U.S. equities finished lower in another roller-coaster ride of a day, with the uncertainty of a near $2.0 trillion fiscal stimulus package remaining after Congress was unable to pass the legislation for a second time today.

Expectations continue to run high that Congress will eventually vote in favor of a deal, but the delay has kept the markets on edge. The drama in Washington overshadowed the massive monetary policy stimulus measures announced by the Federal Reserve this morning.

The Fed said it will purchase Treasuries and mortgage-backed securities “in amounts needed,” along with plans to buy corporate bonds, support the municipal bond market functioning, and a lending program to aid small-and-medium sized businesses.

Treasury yields were lower in continued volatile trading and the U.S. dollar trimmed a recent rally, while crude oil prices were higher and gold jumped. Markets in Europe and Asia finished lower.

The Markets…

The Dow Jones Industrial Average fell 582 points (3.0%) to 18,592

The S&P 500 Index lost 68 points (2.9%) to 2,237

The Nasdaq Composite declined 19 points (0.3%) to 6,861

In heavy volume 1.6 billion shares were traded on the NYSE and 4.3 billion shares changed hands on the NASDAQ

WTI crude oil rose $0.73 to $23.36 per barrel and wholesale gasoline was down $0.20 at $0.41 per gallon

The Bloomberg gold spot price soared $55.95 to $1,554.60 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.4% lower at 102.42

Treasury yields see pressure as volatility continues

Treasuries saw demand as the extreme volatility in the markets continued in the wake of the Fed’s increased stimulus measures and as the markets continue to wait to see if U.S. lawmakers will deliver a near $2.0 trillion fiscal stimulus package.

The yield on the 2-year note declined 6 basis points to 0.31%, the yield on the 10-year note dropped 19 bps to 0.77%, and the 30-year bond rate decreased 22 bps to 1.33%.

Today’s economic calendar was void of any major releases, but the ball will get rolling tomorrow with the releases of the preliminary manufacturing and services PMIs as reported by Markit, with economists projecting respective readings of 44.0 and 42.0, with 50 the level that divides expansion and contraction in activity, as well as new home sales for February, expected to have declined 1.8% month-over-month to an annual rate of 750,000.

Europe and Asia fall as pandemic continues to roil the markets

European equities remained lower amid the overnight disappointment from the snag of a near $2.0 trillion U.S. fiscal stimulus package in Congress yesterday. Stocks fell back in the red after trimming the downside move briefly following another dose of measures from the Federal Reserve to combat to impact of the COVID-19 pandemic. Europe remains hampered by the spreading coronavirus that has shifted the epicenter of the outbreak to the region, leading to many key countries going on lock-down to exacerbate the outlook for the economic impact.

The U.K. FTSE 100 Index was down 4.3%, France’s CAC-40 Index declined 3.3%, Germany’s DAX Index decreased 2.1%, Spain’s IBEX 35 Index dropped 3.3%, Italy’s FTSE MIB Index traded 1.1% lower, and Switzerland’s Swiss Market Index moved 5.4% to the downside.

Stocks in Asia mostly tumbled again to begin the week, with the global markets remaining hampered by the expected extreme economic and health impacts of the COVID-19 pandemic, exacerbated by the highly-anticipated near $2.0 trillion U.S. fiscal stimulus package that hit a snag in the Senate over the weekend.

India’s S&P BSE Sensex 30 Index felt the brunt of the heavy selling pressure, plunging 13.2%, while Australia’s S&P/ASX 200 Index fell 5.6% and South Korea’s Kospi Index dropped 5.3%. China’s Shanghai Composite Index traded 3.1% lower and the Hong Kong Hang Seng Index declined 4.9%. However, Japan’s Nikkei 225 Index bucked the trend, rising 2.0% despite some strength in the yen.

Market Insights 3/19/2020

U.S. equities finished a choppy session on a high note after multiple global central banks, including the Fed, and governments announced additional measures to combat the economic impact of the COVID-19 pandemic.

The Federal Reserve, the European Central Bank (ECB) and the Bank of England (BoE) initiated additional programs to help calm nerves in the financial markets, while the Senate passed a U.S. fiscal package, with reports that more plans may be in the offing.

Treasury yields pulled back from a recent rise, and the U.S. dollar continued to rally, while crude oil prices bounced off historic lows, and gold was modestly lower. In notable equity news, the Big-Three automakers announced that they will close all U.S. factories until the end of March, affecting up to 150,000 union workers.

Europe finished solidly higher, getting a boost from the latest announcements in the region, but Asia was lower.

The Markets…

The Dow Jones Industrial Average gained 188 points (1.0%) to 20,087

The S&P 500 Index rose 11 points (0.5%) to 2,409

The Nasdaq Composite advanced 161 points (2.3%) to 7,151

In heavy volume, 1.7 billion shares were traded on the NYSE and 4.7 billion shares changed hands on the NASDAQ

WTI crude oil jumped $5.08 to $25.91 per barrel and wholesale gasoline added $0.05 to $0.69 per gallon

The Bloomberg gold spot price declined $6.44 to $1,479.61 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—rallied 1.6% to 102.76

The continued uncertainty surrounding the spreading of the COVID-19 (coronavirus) pandemic has touched many facets of the economy and the basic standard of living across the globe. U.S. cities and countries overseas continue to ramp up measures to combat the disease, including social distancing and some lockdowns. Travel restrictions across the world remain in place, businesses and schools have been shuttered, the New York Stock Exchange said it will temporarily close its iconic trading floor and move fully to electronic trading, and the list of major events that have been canceled as a result continues to expand.

In an effort to ease the strain many Americans are facing amid the extraordinary measures taken to combat the COVID-19 outbreak, the U.S. Senate overwhelmingly passed legislation, which was quickly signed by President Trump, that will provide billions of dollars for free testing, paid sick leave and additional spending. In addition, Congress and the White House are discussing additional measures that could add up to $1.3 trillion in stimulus, which may include direct payments to taxpayers, aid for businesses and loan guarantees.

The “Big-Three” automakers announced plans to close all U.S. automobile factories amid the coronavirus crisis. General Motors Company, Ford Motor Company and Fiat Chrysler Automobiles NV all said the facilities will remain shuttered through the end of March, while they will evaluate the situation at the end of the hiatus. The closures would affect up to 150,000 union workers, according to the United Auto Workers.

Leading Index ticks higher, jobless claims jump and regional manufacturing plummets

The Conference Board’s Index of Leading Economic Indicators (LEI) for February ticked 0.1% higher month-over-month (m/m), matching the Bloomberg projection, while January’s figure was revised slightly lower to a 0.7% increase. A senior official at the agency indicated that, “The U.S. LEI rose slightly in February, but it doesn’t reflect the impact of the COVID-19 pandemic which began to hit the U.S. economy in full by early March. The slight gain in February came only from half of the LEI components.

Weekly initial jobless claims rose by 70,000 to 281,000, above the Bloomberg estimate of 220,000 and the highest level since September of 2017, with the prior week’s figure being unrevised at 211,000. The four-week moving average increased by 16,500 to 232,250, while continuing claims rose by 2,000 to 1,701,000, south of estimates of 1,738,000. The report is one of the few recent economic reports that includes data during the COVID-19 crisis.

Treasuries gained ground, as the yield on the 2-year note was down 4 basis points at 0.49%, the yield on the 10-year note fell 9 bps to 1.17% and the 30-year bond rate lost 8 bps to 1.81%.

Europe higher following ECB and BoE stimulus announcements, Asia lower

European equities finished higher following the announcements from the European Central Bank (ECB) and the Bank of England (BoE) of monetary policy fiscal stimulus initiatives. The ECB said it will launch a new “Pandemic Emergency Purchase Programme” to help aid the European economy. The stimulus package includes the use of 750 billion euros ($820 billion) to purchase financial assets, both private and public sector bonds, as well as some commercial paper, by year end. As well, the BoE announced that it cut its benchmark interest rate by 15 bps to 0.10% and will increase its bond-buying program by 200 billion pounds.

The euro was lower versus the U.S. dollar, while the British pound gained ground against the greenback following the BoE’s announcement, while bond yields in the region were mixed—with notable declines in Italy and Spain that have seen rates spike as of late.

The U.K. FTSE 100 Index was up 1.8%, France’s CAC-40 Index increased 2.7%, Germany’s DAX Index rose 2.4%, Spain’s IBEX 35 Index was 2.0% higher, Italy’s FTSE MIB Index advanced 2.3% and Switzerland’s Swiss Market Index rallied 5.3%.

Stocks in Asia finished with widespread losses, led by an 8.4% plunge in South Korea’s Kospi Index, as the uncertainty regarding the economic impact of the spreading coronavirus pandemic remained the main catalyst.

Australia’s S&P/ASX 200 Index finished 3.4% lower after being higher early on following an unexpected decline in the nation’s unemployment rate, while India’s S&P BSE Sensex 30 Index declined 2.0%, China’s Shanghai Composite Index lost 1.0%, and the Hong Kong Hang Seng Index moved 2.6% to the downside.

Market Insights 3/13/2020

U.S. equities ended the final trading session of the week on a positive note, finishing solidly higher after suffering the worst day since the October 1987 crash yesterday that ended the long-standing bull market, with the markets perusing a slew of global monetary policy responses out of the U.S., Europe, the U.K., Japan, China and Australia.

President Trump declared a national emergency as a result of the COVID-19 outbreak, unlocking funds and initiatives at the federal and state levels to help in the combat against the virus, and to potentially ease some of the economic stress. Treasury Secretary Mnuchin vowed that liquidity will be available, and reports are suggesting U.S. lawmakers are close to responding with additional aid. The Federal Reserve has responded with a $1.5 trillion liquidity injection campaign aimed at helping ease strained conditions in the capital markets, which followed yesterday’s expansion of quantitative easing measures from the European Central Bank (ECB).

However, the uncertainty remains extremely high regarding the impact of the pandemic, exacerbated by the coinciding oil crisis and subsequent strain in the Treasury markets that the Fed is combating.

Treasury yields were higher and crude oil gained modest ground, while the U.S. dollar added to yesterday’s rally, and gold tumbled. In economic news, consumer sentiment fell by a smaller amount than expected, and import prices declined.

The Markets…

The Dow Jones Industrial Average soared 1,985 points (9.4%) to 23,186

The S&P 500 Index jumped 230 points (9.3%) to 2,711

The Nasdaq Composite rallied 672 points (9.3%) to 7,874

In heavy volume, 1.9 billion shares were traded on the NYSE and 4.6 billion shares changed hands on the NASDAQ

WTI crude oil gained $0.23 to $31.73 per barrel and wholesale gasoline was flat at $0.90 per gallon

The Bloomberg gold spot price sank $55.40 to $1,520.75 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—rose 1.3% to 98.70

For the week, the Dow was down 10.4%, the S&P fell 8.8% and the NASDAQ declined 8.2%.

Consumer sentiment falls by smaller amount than expected, import prices decline

The March preliminary University of Michigan Consumer Sentiment Index declined to 95.9 versus the Bloomberg expectation of a drop to 95.0 from February’s 101.0 reading. The index fell from the highest level since March 2018, as both the current conditions portion and the expectations component deteriorated. The 1-year inflation forecast dipped to 2.3% from February’s 2.4% rate, but the 5-10 year inflation forecast remained at the prior month’s 2.3% level.

Treasuries gave back some of a recent rally, as the yield on the 2-year note rose 1 basis point (bp) to 0.51%, the yield on the 10-year note increased 14 bps to 0.99%, and the 30-year bond rate was up 18 bps to 1.59%.

Europe bounces back after yesterday’s sharp tumble, Asia mixed

European equities rebounded somewhat from the recent tumble in the global markets that has come from the intensified worries regarding the impact of the coronavirus pandemic. The markets were able to regain some of their footing after the sharp tumble, digesting a flood of stimulus measures from the Fed in the U.S. and ECB yesterday, which followed last week’s response from the Bank of England, while a fiscal response in the U.S. appears to be in the works. China and Japan added measures to try to stabilize the markets. The euro and British pound fell versus the U.S. dollar, and bond yields in the region rallied.

The U.K. FTSE 100 Index was up 1.7%, France’s CAC-40 Index gained 1.8%, Spain’s IBEX 35 Index jumped 3.7%, Germany’s DAX Index moved 0.8% higher, Italy’s FTSE MIB Index advanced 7.1%, and Switzerland’s Swiss Market Index rose 1.2%.

Stocks in Asia finished mixed on the heels of the dramatic tumble in the U.S. markets yesterday, that ended the bull market for the world’s largest economy that lasted over a decade. Fears of the coronavirus pandemic that has disrupted the world’s standard of living and claimed many lives, continued to foster heightened economic and earnings uncertainty, exacerbated by the crisis in the oil markets amid an all-out price war between Saudi Arabia and Russia.

Japan’s Nikkei 225 Index plunged 6.1% and South Korea’s Kospi Index fell 3.4%, while China’s Shanghai Composite Index traded 1.2% lower and the Hong Kong Hang Seng Index dropped 1.1%. However, Australia’s S&P/ASX 200 Index rebounded 4.4%, with the Reserve Bank of Australia injecting billions of dollars into the financial sector, and India’s S&P BSE Sensex 30 Index bounced 4.0%.

Stocks post another week reminiscent of the financial crisis

The global markets continued to tumble, and U.S. stocks posted the worst week since the financial crisis in 2008, culminating with Thursday’s plunge that was the largest percentage point drop since October 1987. All the major stock market sectors fell decisively as conviction was eviscerated by a triple whammy of downside catalysts that caused the Street to head for safety amid heavy economic and earnings uncertainty.

The coronavirus continued to spread, leading Italy to take drastic measures, and exacerbate the containment efforts in the U.S. As such, the World Health Organization (WHO) declared the COVID-19 outbreak a pandemic. Also, the oil markets crashed to further pummel the energy sector as festering demand concerns were met with an all-out price war between Russia and Saudi Arabia.

Making matters worse, the Treasury markets began to show signs of stress amid the increased flight to safety that took the entire yield curve below 1.0% for the first time and prompted the Federal Reserve to respond with a $1.5 trillion liquidity campaign. The Fed’s latest move came after last week’s surprising 50 bps rate cut and in conjunction with this week’s host of global monetary policy responses.

The U.S. dollar managed to rebound late in the week off of Monday’s drop to a level not seen since the beginning of Fall 2018. The panic in the markets led to a counter-intuitive drop for gold, which retreated sharply after hitting a multi-year high north of $1,700 on Monday, as forced selling and a rush to cash ensued. The extreme movements in the markets continued to overshadow another dose of upbeat economic data, with small business optimism improving for February and weekly initial jobless claims unexpectedly dipping.

Next week, the markets are likely to remain volatile amid the heightened uncertainty regarding the pandemic, as the energy sector deals with the fallout from the crash in oil prices and the Fed continues operations to keep the plumbing of the Treasury markets functioning properly.

The economic calendar will likely once again take a back seat to the aforementioned catalysts, but the midweek monetary policy decision from the Federal Open Market Committee (FOMC), along with the subsequent press conference by Chairman Jerome Powell, are likely to garner heavy attention, with expectations elevated that the Central Bank could take its target for the fed funds rate lower and some probability that a move to zero could result. The markets will also be seeing if the FOMC announces further measures to combat the turmoil in the markets.

Market Insights 3/10/2020

U.S. equities rebounded from Monday’s tumble to finish higher in a volatile session that saw 1,000+-point swings in both directions for the Dow throughout the day, amid increased expectations that a fiscal policy response to the coronavirus outbreak may be on the horizon.

President Donald Trump met with Congressional members today and pitched the possibility of a payroll tax cut to aid in the uncertainty surrounding the extraordinary turmoil as of late, with a press conference set for after today’s close.

Crude oil prices also recovered some of yesterday’s plunge after Russia suggested that it may be open to resuming talks with Saudi Arabia, which boosted production in reaction to Russia’s resistance of OPEC’s proposed production cuts last week that ignited an oil price war and tanked crude prices.

Treasury yields bounced off a recent tumble to all-time lows and the U.S. dollar pared yesterday’s drop, with a modest increase in small business optimism in February the only item of note on the economic calendar.

Gold traded sharply lower. Europe turned lower amid the continued coronavirus uneasiness within in the region, but markets in Asia were higher.

The Markets…

The Dow Jones Industrial Average rallied 1,167 points (4.9%) to 25,018

The S&P 500 Index jumped 136 points (4.9%) to 2,882

The Nasdaq Composite climbed 394 points (5.0%) to 8,344

In heavy volume, 1.8 billion shares were traded on the NYSE and 4.3 billion shares changed hands on the NASDAQ

WTI crude oil gained $3.23 to $34.36 per barrel and wholesale gasoline was up $0.02 to $1.16 per gallon

The Bloomberg gold spot price fell $34.17 to $1,646.30 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—jumped 1.6% to 96.45

The stock markets, crude oil prices, Treasury yields and the U.S. dollar all recovered some of yesterday’s decisive tumbles that came as the amplified economic and earnings uncertainty regarding the spreading of the coronavirus was met with a crash in oil prices as a price war erupted after Saudi Arabia pledged to boost production on the heels of Russia’s resistance of OPEC’s proposed production cuts.

Treasuries gave back some of yesterday’s strong rally, as the yield on the 2-year note was up 20 bps at 0.53%, the yield on the 10-year note gained 29 bps to 0.79%, and the 30-year bond rate advanced 39 bps to 1.31%.

Expectations are running high that the Fed and other global central banks may deploy further stimulus measures after the Fed’s surprising 50 basis point rate cut last week and ahead of this week’s monetary policy decision from the European Central Bank (ECB).

Europe lower amid continued uncertainty, Asia rebounds

European equities finished lower, adding to yesterday’s sharp drop, as the markets reversed course with increased attention on the spreading coronavirus turning to Europe. Crude oil prices and bond yields rebounded from decisive tumbles as monetary and fiscal support expectations rise, aimed at combating the impact of the spreading coronavirus outbreak.

Switzerland’s Swiss Market Index finished little changed, while the U.K. FTSE 100 Index was down 0.1%, Germany’s DAX Index declined 1.4%, France’s CAC-40 Index lost 1.5%, Spain’s IBEX 35 Index fell 3.2% and Italy’s FTSE MIB Index decreased 3.3%.

Stocks in Asia mostly rebounded from yesterday’s sharp drop as a price war in the oil market joined festering concerns regarding the impact of the spreading coronavirus.

Japan’s Nikkei 225 Index rose 0.9%, China’ Shanghai Composite Index increased 1.8%, and the Hong Kong Hang Seng Index gained 1.4%. Australia’s S&P/ASX 200 Index rallied 3.1% and South Korea’s Kospi Index traded 0.4% higher. Markets in India were closed for a holiday.

Market Insights 3/9/2020

U.S. equities finished sharply lower after resuming trading following a triggered fifteen minute halt nearly right after the U.S. markets opened, as dysfunction on the energy front added another layer of volatility to stymie conviction that has already been elevated amid the accelerated uncertainty regarding the earnings and economic impact of the spreading coronavirus outbreak.

More cases in the U.S. have been reported and Italy has deployed aggressive containment measures, while the energy sector’s turmoil was exacerbated by Saudi Arabia launching an oil price war on the heels of last week’s failed production cut proposal by OPEC that Russia rejected.

Treasury yields plunged, with the entire yield curve falling below 1.0% for the first time in history during the day, and the U.S. dollar fell, as expectations that the Fed will deploy further rate cuts and potential extraordinary measures have increased as well as the possibility of government fiscal stimulus actions to combat the impact.

Gold traded slightly higher. Overseas, both Europe and Asia finished with widespread losses.

The Markets….

The Dow Jones Industrial Average dove 2,013 points (7.8%) to 23,851

The S&P 500 Index lost 226 points (7.6%) to 2,746

The Nasdaq Composite plummeted 625 points (7.3%) to 7,951

In heavy volume, 2.1 billion shares were traded on the NYSE and 4.5 billion shares changed hands on the NASDAQ

WTI crude oil plunged $10.15 to $31.13 per barrel and wholesale gasoline was down $0.25 to $1.14 per gallon

The Bloomberg gold spot price was up $3.40 to $1,677.23 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—dropped 1.0% to 94.95

Rally in Treasury markets shifts into a higher gear as global market turmoil hits a new level

Treasuries saw the recent rally accelerate as the global markets continue to experience heightened volatility, as the yield on the 2-year note fell 11 basis points (bps) to 0.39%, the yield on the 10-year note dropped 13 bps to 0.58%, and the 30-year bond rate tumbled 17 bps to 1.05%.

Bond yields cratered, with the entire yield curve falling below 1.0% intraday for the first time in history. The markets responded to the shock in the oil markets, the intensified spreading of the coronavirus across the globe, and increased expectations that the Federal Reserve will deploy further rate cuts and possibly extraordinary measures. This morning, the New York Federal Reserve announced that it will increase the amount of money it is offering to banks for their short-term funding needs.

Stocks in Europe and Asia tumble as global market selloff intensifies

European equities fell sharply, with the global markets accelerating the recent selloff to begin the week as an oil price war applied further pressure on conviction, joining the accelerating spreading of the coronavirus and the expected increased response from central banks around the globe. Bond yields dropped to new lows, with the entire yield curve in the U.S. south of 1.0% for the first time in history, while the euro and British pound rose versus the U.S. dollar.

The U.K. FTSE 100 Index was down 6.5%, France’s CAC-40 Index was off 7.7%, Germany’s DAX Index tumbled 7.4%, Spain’s IBEX 35 Index fell 7.6%, Italy’s FTSE MIB Index plunged 9.7%, and Switzerland’s Swiss Market Index traded 5.1% lower.

Stocks in Asia dropped broadly to begin the week, with OPEC’s proposed production cut last week that was rejected by Russia sparking an oil price war and adding another layer of market turmoil as Saudi Arabia said it plans to boost oil output.

The intensified spreading of the coronavirus, with Italy announcing aggressive containment measures and cases in the U.S. continuing to rise, applied further fuel to the flight to safety, which boosted the Japanese yen.

Japan’s Nikkei 225 Index tumbled 5.1% and Australia’s S&P/ASX 200 Index plunged 7.3%, while India’s S&P BSE Sensex 30 Index dropped 5.2%. China’s Shanghai Composite Index fell 3.0%, the Hong Kong Hang Seng Index slid 4.2%, and South Korea’s Kospi Index dropped 4.2%.