Dow sank 390, decliners over advancers 5-1 & NAZ lost 140. The MLP index fell 7+ to 161 & the REIT index dropped 7 to the 396s. Junk bond funds were weak again along with a declining stock market & Treasuries skyrocketed, taking the yield on the 10 year Treasury down an amazing 15 basis points to 0.76% (more below). Oil dropped 3+ to the 42s & gold pulled back 13 to 1654.
AMJ (Alerian MLP Index tracking fund)
Fears surrounding the new coronavirus have pushed a tidal wave of money into the Treasury markets, forcing yields to historic lows & giving homebuyers the potential deal of a lifetime. The yield on the benchmark 10-year note briefly plunged by more than 22 basis points to an all-time bottom of 0.695% & the 30-year tumbled more than 28 basis points to its own record of 1.28%. Both have since bounced back slightly & were hovering at 0.772% & 1.361%, respectively. The fast-spreading COVID-19 has infected 95K worldwide & killed 3300, igniting fears of an economic slowdown that have prompted investors to dump risky assets like stocks in favor of safer ones like Treasuries. The spike in bond demand has driven down yields, the premium that investors demand to make purchases, which hurts savers but benefits homeowners looking to refinance.
The IMF has made $50B available to low-income & emerging market countries to help them withstand the new coronavirus. The funds, $10B of which are available at zero interest for the poorest nations, will give countries the funds necessary to “build stronger health systems & protect their population” as well as bail out the most-impacted businesses, Kristalina Georgieva, managing director at the IMF, said. The fund, set up in 1945, to regulate global currency-exchange rates, works to head off financial crises & extends short-term loans to member nations. “What we are targeting to do is to provide a financial boost,” especially to poor countries, Georgieva added. It's too early to tell whether COVID-19 will lead to a global recession, she added. More than 95K people worldwide have contracted the disease & it has killed more than 3200, hammering financial markets as consumer spending slows while healthcare workers focus on developing an effective treatment. The Federal Reserve slashed its benchmark federal funds rate by 50 basis points this week to insulate the US economy from the fallout. “How far the slowdown would be, how deep it may be, depends on two things," she said. "It depends on the epidemic, but it also depends on the strength of our actions."
Job growth smashes expectations for February as unemployment falls back to 3.5%
Stocks keep plunging while Treasuries & gold are being purchased. Risk averse for investors is being abandoned, they keep buying safe have investments. The Volatility Index (VIX) is up 5 to the 44s & has the potential to go much higher. The Dow has dropped almost 4K since Feb 12 as the outlook continues to be negative. When the good news on the job front gets little attention, the stock market has big problems. This is the time for long term investors to do research on quality stocks, especially Dividend Aristocrats with records of raising annual divs for at least 25 years. At some point in this ugly market, yields will be attractive enough to stimulate stock buying to lock in high yields.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 42.81 | -3.09 | -6.7% |
| GC=F | Gold | 1,684.60 | +16.60 | +1.0% |
Fears surrounding the new coronavirus have pushed a tidal wave of money into the Treasury markets, forcing yields to historic lows & giving homebuyers the potential deal of a lifetime. The yield on the benchmark 10-year note briefly plunged by more than 22 basis points to an all-time bottom of 0.695% & the 30-year tumbled more than 28 basis points to its own record of 1.28%. Both have since bounced back slightly & were hovering at 0.772% & 1.361%, respectively. The fast-spreading COVID-19 has infected 95K worldwide & killed 3300, igniting fears of an economic slowdown that have prompted investors to dump risky assets like stocks in favor of safer ones like Treasuries. The spike in bond demand has driven down yields, the premium that investors demand to make purchases, which hurts savers but benefits homeowners looking to refinance.
Treasury yields sink to record low, giving homebuyers a break
The IMF has made $50B available to low-income & emerging market countries to help them withstand the new coronavirus. The funds, $10B of which are available at zero interest for the poorest nations, will give countries the funds necessary to “build stronger health systems & protect their population” as well as bail out the most-impacted businesses, Kristalina Georgieva, managing director at the IMF, said. The fund, set up in 1945, to regulate global currency-exchange rates, works to head off financial crises & extends short-term loans to member nations. “What we are targeting to do is to provide a financial boost,” especially to poor countries, Georgieva added. It's too early to tell whether COVID-19 will lead to a global recession, she added. More than 95K people worldwide have contracted the disease & it has killed more than 3200, hammering financial markets as consumer spending slows while healthcare workers focus on developing an effective treatment. The Federal Reserve slashed its benchmark federal funds rate by 50 basis points this week to insulate the US economy from the fallout. “How far the slowdown would be, how deep it may be, depends on two things," she said. "It depends on the epidemic, but it also depends on the strength of our actions."
IMF's $50B coronavirus program to boost emerging markets
Nonfarm payrolls grew far more than expected in
Feb as companies continued to hire leading into a growing
coronavirus scare. The Labor Dept reported that the
US economy added 273K new jobs during the month, while the
unemployment rate was 3.5%, matching its lowest level in more than 50
years. An alternative measure of joblessness that counts those not
looking for work & holding part-time jobs for economic reasons edged
higher to 7%. The Jan & Feb gains tied for best month in 2 years. The forecast called for payroll growth of 175K & a 3.5% jobless level. Average hourly earnings grew by 3% over the
past year, in line with estimates, while the average work week,
considered a key measure of productivity, nudged up to 34.4 hours. There
was more good news for the jobs market: The previous 2 months'
estimates were revised higher by a total of 85K. Dec moved up
from 147K to 184K, while Jan went from 225K to 273K.
Those revisions brought the 3-month average up to a robust 243K
while the average monthly gain in 2019 was 178K. Despite the strong numbers, stocks were lower stemming
from worries over the effects of the coronoavirus outbreak. Gains were spread across a multitude of sectors as the total employment level hit 158.8M, near its Dec 2019 record. Health
care & social assistance led the way in job creation with 57K new
positions. Food services & drinking places both added 53K while
government employment grew by 45K due to Census hiring & state
gov education. Construction added 42K thanks to continued mild
weather, while professional & technical services contributed 32K & finance rose by 26K, part of a 160K gain over the past 12
months. In the survey of households, employment rose by 126K while the ranks of the unemployed decreased by 105K.
Job growth smashes expectations for February as unemployment falls back to 3.5%
Stocks keep plunging while Treasuries & gold are being purchased. Risk averse for investors is being abandoned, they keep buying safe have investments. The Volatility Index (VIX) is up 5 to the 44s & has the potential to go much higher. The Dow has dropped almost 4K since Feb 12 as the outlook continues to be negative. When the good news on the job front gets little attention, the stock market has big problems. This is the time for long term investors to do research on quality stocks, especially Dividend Aristocrats with records of raising annual divs for at least 25 years. At some point in this ugly market, yields will be attractive enough to stimulate stock buying to lock in high yields.
Dow Jones Industrials
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