Oil and stock futures rise after historic rout - Financial Times

Global markets have recovered some of their heavy losses as investors bet policymakers would launch new stimulus measures to soften the economic blow from the global coronavirus outbreak.

European stocks gained at the open on Tuesday as a measure of calm returned following a chaotic trading day which saw a wave of selling spread around the world as a collapse in the price of oil compounded economic concerns surrounding the spread of the coronavirus.

London’s FTSE 100 gained 1.1 per cent after falling 7.7 per cent in the previous session in its largest daily fall since the height of the 2008-09 financial crisis. Germany’s Dax rose 0.9 per cent, and France’s Cac 40 was 1.3 per cent higher.

S&P 500 futures tipped the US benchmark to rise 2.5 per cent when trading begins later in the day, which would partially reverse a 7.6 per cent fall in the index on Monday — its biggest single-day plunge since the global financial crisis.

The fading sense of panic on Tuesday prompted investors to sell havens, which have rallied furiously in recent weeks. The 10-year US Treasury yield jumped 15 basis points (0.15 percentage points) to 0.6475 per cent, after having dived below the 0.5 per cent threshold for the first time on Monday. The 30-year Treasury yield rose 13 bps to back above 1 per cent. Bond prices fall as yields rise.

Those moves followed a promise by President Donald Trump of a “major” economic relief package to reduce the negative impact from the Covid-19 outbreak, including a possible payroll tax cut.

Brent crude, the international oil benchmark, rebounded 5 per cent to $36 a barrel on Tuesday, while the US marker West Texas Intermediate rose to $33. In Monday’s rout, oil plunged by a quarter in its sharpest one-day drop since the 1991 Gulf war.

In China, the CSI 300 stock index closed 2.1 per cent higher after President Xi Jinping made his first visit to Wuhan, the city at the centre of the country’s outbreak, in a signal that the Communist party believed it had brought the epidemic under control.

“You’ve got a thin semblance of sanity in the market today, but we are talking very thin indeed,” said one Tokyo-based broker. “There are some stabilisers out there — the low oil price is actually not bad for some of these big Asian economies — but there is nothing in the news that makes anything look remotely settled.”

Japan’s Topix closed up 1.3 per cent after falling 5.6 per cent a day earlier.

Other Asian equity markets swung higher. Australia’s S&P/ASX stock index 200 closed up 3.1 per cent, while Hong Kong’s Hang Seng rose 1.4 per cent.

Ken Cheung, chief Asian FX strategist at Mizuho, said Mr Xi’s visit to Wuhan had buoyed markets as had Mr Trump’s pledge of stimulus measures. But he warned that the recovery in markets “should prove to be shortlived” if governments did not follow through on their promises.

Analysts were sceptical that Brent could hold on to Tuesday’s gains given Saudi Arabia’s plan to increase oil output. Citigroup said the global benchmark “looks like it will fall below $30 a barrel, with no clear end in sight for a new price range”.

In Japan, stocks staged one of their biggest intraday recoveries in decades on Tuesday as the yen fell sharply against the dollar and hedge funds and retail investors stampeded to cover short positions.

The yen weakened as much as 2 per cent to ¥104.52 per dollar, past the ¥103 level that is seen as an important threshold for the currency. 

After shedding almost 4 per cent of its value in a bleak morning session that defied the buoyancy of oil markets and US futures, Japan’s Topix began a sharp reversal through the afternoon to close higher.

The total reversal of 6.23 per cent was described by traders in Tokyo as “astonishing” given the absence of positive news on the coronavirus and a growing scepticism over the effectiveness of government stimulus measures expected to be announced in Tokyo later on Tuesday.

Traders and brokers said the day’s move had clearly exposed the type of investor that had been driving moves in recent days.

“The same very fast money that was driving the market down was now very rapidly covering short positions on the dollar and Japanese equities. In Japan’s case, the CTAs and the leveraged exchange traded funds so loved by Japanese retail investors were in full force,” said one Tokyo based dealer, referring to commodities trading advisers, a type of hedge fund.

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2020-03-10 08:11:20Z
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Saudi Arabia and Russia are playing hardball and waiting for each other to blink in the oil standoff, say analysts - CNBC

The standoff between oil majors Saudi Arabia and Russia could "last a while" as they wait for each other "blink first," an analyst said Tuesday.

The oil markets tanked Monday, plunging over 20% amid already poor sentiment due to the coronavirus outbreak.

The oil slump followed a disagreement on production cuts between OPEC and its allies. Russia declined to lower output last week, and Saudi Arabia announced Saturday that it will offer discounts to its official selling prices next month. The kingdom is also reportedly planning to raise production.

"It's always tough to pick a fight with Russia, with Putin," said Robert Johnston, director of global energy and natural resources at the Eurasia Group, a consultancy.

"Now you have a standoff between Saudis and Russians over who will blink first. I do think this is going to last a while; I think this could be two to three months at least," Johnston told CNBC.

As much as the squabble is about oil production and prices, it is also about challenging the narrative of U.S. energy dominance, he added.

The U.S. shale industry has changed the landscape for the global energy sector as the country heads toward becoming a net energy exporter.

"Russia has been pushing back against U.S. influence all over the world, so think this is tied to that. I don't think that would be resolved in the next two or three weeks," said Johnston.

It is an expensive and risky move by Moscow, which is a relatively expensive producer and it remains to be seen if they will be able to "kill shale or put it into hibernation," he said. But, "they do have a lot of dry powder to work with here."

There are already about 3 million barrels a day in crude oil oversupply this year, so any loss in U.S. supply due to producers being squeezed out in the low-price environment would not be bullish for prices, said Richard Gorry, managing director at JBC Energy Asia.

"If both parties stick to their guns, they are both playing extreme hardball right now, if that remains the case ... we could see prices lower again," said Gorry.

Benchmark international Brent crude oil futures were trading around $37 a barrel on Tuesday afternoon in Asia, while benchmark U.S. West Texas Intermediate was trading around $33 a barrel.

But the price plunge can "easily reverse if we get an agreement" to take supply out of the market. "There is still time to do it but there may be wider political interests at stake here also that complicates the picture," said Gorry.

JPMorgan is forecasting $37 a barrel Brent crude on average for the second quarter of 2020 and $42 a barrel Brent crude for the third quarter of 2020. That outlook assumes the base case that Saudi produces 10.2 million barrels of oil a day in the coming quarters, up from the current 9.7 million barrels a day. In that scenario, Brent will average $44 a barrel this year.

But if Saudi produces 11 million barrels of crude a day by the end of 2020, the price of Brent will average $39 a barrel, said Scott Darling, head of Asia Pacific commodities research at JPMorgan.

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2020-03-10 07:52:06Z
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Asian stocks bounce after huge losses on news of possible U.S. tax cut - MarketWatch

BEIJING (AP) — Asian stock markets took a breather from recent steep declines on Tuesday, with several regional benchmarks gaining more than 1% after New York futures reversed on news that President Donald Trump plans to ask Congress for a tax cut and other quick measures to ease the pain of the virus outbreak.

Tuesday’s rebounds followed Wall Street’s biggest one-day drop since the 2008 global crisis. Oil prices also bounced back from a record-setting fall.

Hong Kong’s benchmark jumped 1.8%, Sydney’s added 1.2% and Shanghai’s climbed 0.6%. Shares edged slightly lower in Tokyo and Seoul after bouncing in and out of negative territory.

Brent crude, the basis for international oil prices, gained 6.7% but still was down by nearly half from its January peak.

Selloffs Monday reflected alarm over mounting economic damage from the coronavirus that emerged in China in December. Anti-disease controls that shut down Chinese factories are spreading as the United States and European countries close schools, cancel public events and impose travel controls.

Anxiety has mounted as Italy, the hardest-hit place in Europe, said travel controls imposed earlier on its north would be extended nationwide. Ireland canceled St. Patrick’s Day parades and Israel ordered visitors quarantined ahead of Passover and Easter, one of the busiest travel periods of the year.

The mounting losses and a flight by investors into the safe haven of bonds have fueled warnings the global economy, which already was showing signs of cooling, might be headed into a recession.

The drop in U.S. stock prices on Monday was so sharp that it triggered Wall Street’s first trading halt in more than two decades. But Trump’s comment that he will seek relief for workers as ripple effects of the outbreak spread gave some investors an excuse to resume buying.

“This is not like the financial crisis where we don’t know the end is in sight,” said Treasury Secretary Steven Mnuchin. “This is about providing proper tools and liquidity to get through the next few months.”

On Tuesday, the Nikkei 225 NIK, +0.85% in Tokyo swung between modest gains and losses, losing 0.2% to 19,666.71. The Shanghai Composite Index SHCOMP, +1.81% advanced to 2,961.54. The Kospi 180721, +0.41% in Seoul edged 0.1% lower to 1,952.46.

Hong Kong’s Hang Seng HSI, +1.40% surged to 25,504.33 and the S&P-ASX 200 XJO, +3.10% in Sydney rose to 5,835.70. Singapore and Jakarta advanced by more than 1%, while New Zealand and Malaysia declined.

Benchmark U.S. crude CL.1, +7.80% gained 6.7%, or $2.09, to $33.22 per barrel in electronic trading on the New York Mercantile Exchange. It lost 25% on Monday to $31.13 per barrel. Brent crude BRNK20, +6.75% gained $2.53, or 7.4%, to $36.89 per barrel in London.

Oil prices plunged 25% after Russia refused to roll back production in response to virus-depressed demand. Saudi Arabia signaled it will ramp up its own output.

Stock markets usually welcome lower energy costs for consumers and businesses. But the decline cuts into revenue for producers, including the United States. And the abrupt drop, coming amid virus fears, rattled investors.

On Wall Street, the S&P 500 index SPX, -7.59% fell 7.6% to 2,746.56 for its biggest one-day drop since Dec. 1, 2008. The Dow Jones Industrial Average DJIA, -7.78% lost 7.8% to 23,851.02. The Nasdaq composite COMP, -7.28% gave up 7.3% to 7,950.68.

The S&P dropped 7.4% in the first few minutes of trading, triggering an automatic 15-minute market-wide trading halt. That has happened only once before, in 1997.

The S&P 500 has fallen 18.9% from its Feb. 19 record and has lost $5.3 trillion in value. U.S. stocks are close to entering a bear market, defined as a drop of 20% from their peak.

“Right now, it’s all-out panic,” said Phil Flynn of Price futures Group. “I think the situation is going to improve when cooler heads prevail, but it’s going to be a rocky road for the next couple of weeks.”

European stock indexes already are in a bear market after recording their biggest declines since the 2008 crisis.

Central banks in the United States, China and other countries have cut interest rates to try to shore up economic activity. But economists warn that while rate cuts might help to buoy consumer demand, they cannot reopen factories that are closed due to quarantines or lack of workers and raw materials.

“Even coordinated policy responses are not a tried and tested panacea and by no means guarantee the ability to durably pull markets back from the brink of bear territory,” Vishnu Varathan of Mizuho Bank said in a report.

The yield on U.S. Treasury bonds edged up to 0.66% after falling as low as 0.5% as investors shifted money into safe haven assets. It had never been below 1% until last week.

The yield, or the difference between the market price and what investors will receive if they hold the bond to maturity, is seen as a measure of economic confidence. Investors shift money into bonds if they expect economic growth and stock prices to weaken. That pushes up the bond’s market price and narrows the yield.

In the United States, a cruise ship with a cluster of coronavirus cases that forced it to idle off the California coast for days docked at Oakland as officials prepared to start bringing passengers to military bases for quarantine or return them to their home countries.

The Grand Princess had more than 3,500 people aboard, 21 of them infected. Japan’s handling of a similar situation involving a cruise ship that docked in Yokohama is seen as a major factor behind the spread of the virus in that country.

For most people, the coronavirus causes only mild or moderate symptoms, such as fever and cough. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia. The vast majority of people recover from the virus, as has already happened with about three-quarters of those infected in China.

While the crisis is easing in China, where the virus was first detected, fast-growing clusters have turned up in South Korea, Japan, Iran and Italy, and the caseload is growing in the United States.

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2020-03-10 07:40:00Z
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Saudi Arabia Seizes Oil Market By The Throat; Stock Market Shokes | Rachel Maddow | MSNBC - MSNBC

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1. Saudi Arabia Seizes Oil Market By The Throat; Stock Market Shokes | Rachel Maddow | MSNBC  MSNBC
2. Russia Vs. Saudi Arabia: Who Will Win Oil's Price War?  Bloomberg Markets and Finance
3. Goldman Sachs: Prepare For $20 Oil  Nasdaq
4. Coronavirus oil panic will help prove predatory pricing doesn't work  Washington Examiner
5. Six Thoughts on the Collapse of the Oil Market  Bloomberg
6. View Full Coverage on Google News

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2020-03-10 07:23:35Z
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Live updates: U.S. markets crater with stocks down more than 5 percent as coronavirus spreads - The Washington Post

The forced freeze was a sign of volatility for Wall Street amid the most turbulent trading in recent memory. Another 15-minute halt will be triggered if the S&P 500’s losses hit the 13 percent threshold. In the event of a 20 percent decline, markets would shut down for the day.

“The bull market’s 11-year birthday is today but investors are not in a celebratory mood with trading halted shortly after the open as markets plunged,” Greg McBride, chief financial analyst at Bankrate.com, wrote in commentary Monday. “The uncertain economic impact of coronavirus continues to grip markets, with stocks, commodities and interest rates all dropping sharply. Markets hate uncertainty and there is a ton of it currently in play.”

But the first-ever halt seemed to have a stabilizing effect, spurring a rebound in all U.S. indices. Less than an hour after the freeze, the Dow was down more than 1,380 points, or roughly 5.3 percent. The S&P 500 was also down 5.3 percent and the Nasdaq was 4.8 percent in the red.

Oil prices tumbled into the $30s, after Saudi Arabia and Russia deadlocked over production. The Saudis had been pushing for a cut in output to prop up prices, but did a reversal when Russia balked and decided, instead, to flood the market with hundreds of thousands of additional barrels per day at a steep discount — a move analysts fear may trigger a price war.

“Cheap oil is one thing. Super cheap oil is another,” said John Kilduff of Again Capital. “The stock market is looking at the oil price plunge as a canary in the coal mine of a disinflationary one-two punch, driven partly by cratering demand for transportation fuels and a wanton price war among the major oil producers” that will result in big losses for U.S. and Canadian producers.

Global markets were apoplectic. Japan’s Nikkei closed down more than 5 percent, while Hong Kong’s Hang Seng Index shed more than 4.2 percent. European markets were tumbling more than 7 percent across the board in midday trading.

Panic pushed the yield on the U.S. 10-year Treasury below 0.4 percent for the first time in history Monday as investors fled for safe havens. The trajectory could be an ominous sign of a weakening economy, because a low yield can indicate a lack of confidence in economic growth. Yields decline as bond prices rise. Gold, another safe haven, was up 0.4 percent in early trading.

Confirmed U.S. coronavirus cases surpassed 500 over the weekend, with cases in 30 states and the District of Columbia. Americans are beginning to face disruption to their work and travel, and the list of major events canceled in the face of the outbreak grows by the hour.

“The broader stock indexes … finally succumbed to the unraveling of an unbelievable period of excessive optimism on the part of the investing public and speculators,” said Steve Craig, chief energy analyst at Elliott Wave International, in an email. “It’s easy to blame the global selling panic on fears of a coronavirus pandemic, but it has more to do with the unwinding of excessive investor optimism than anything else.”

March 9, 2020 at 11:48 AM EDT

With global economy in balance, the White House and Fed are at odds over how to help

As he concluded meetings in Saudi Arabia on Feb. 23, Federal Reserve Chair Jerome H. Powell sent urgent emails to his staff about the coronavirus. The outbreak was escalating in South Korea, Italy and Iran, and the central bank needed to intensify its response to the economic shock.

While Fed economists began to run through scenarios of what could go wrong, senior White House officials both privately and publicly maintained that there was virtually no reason for concern. On Feb. 25, as Powell began meeting with staff to prepare contingency plans, White House economic adviser Larry Kudlow said the United States had an almost “airtight” containment on the outbreak, a day after urging investors to “buy these dips" in the stock market.

The coronavirus is threatening the economy, with supply chains stalling, tourism falling sharply and the oil markets plunging 30 percent on Sunday night. Yet U.S. economic leaders are divided about how to respond, with Powell and his Trump administration counterparts, Kudlow and Treasury Secretary Steven Mnuchin, differing in their assessments of the risks as well as the policies best suited to address the economic threat.

Not only do the Fed and White House appear to disagree on the severity of the potential economic hit, they’re at odds about the power of interest rate cuts to stem the panic. Trump and Kudlow have emphasized the Fed’s power to cut interest rates as the primary economic response to the crisis. But although they have moved to cut rates, Powell and others at the Fed have suggested that they have only a limited role to play, with some Fed officials arguing that spending or tax stimulus from Congress and the president would have a greater effect.

By Heather Long and Jeff Stein

March 9, 2020 at 11:39 AM EDT

President Trump downplays sell-off, says price war is ‘good for the consumer’

President Trump tried to rein in panic surrounding Wall Street’s meltdown in tweets Monday, even as he privately considered a menu of policy options to limit the economic fallout from the coronavirus. He blamed the sell-off on oil concerns rather than the virus’s growing presence in the United States and said the oil skirmish would be “good for the consumer.”

“Nothing is shut down, life & the economy go on,” Trump tweeted. “At this moment there are 546 confirmed cases of CoronaVirus, with 22 deaths. Think about that!”

So last year 37,000 Americans died from the common Flu. It averages between 27,000 and 70,000 per year. Nothing is shut down, life & the economy go on. At this moment there are 546 confirmed cases of CoronaVirus, with 22 deaths. Think about that!

— Donald J. Trump (@realDonaldTrump) March 9, 2020

Saudi Arabia and Russia are arguing over the price and flow of oil. That, and the Fake News, is the reason for the market drop!

— Donald J. Trump (@realDonaldTrump) March 9, 2020

Good for the consumer, gasoline prices coming down!

— Donald J. Trump (@realDonaldTrump) March 9, 2020

Speaking to reporters on the sidelines of a women’s summit at Northeastern University, House Speaker Nancy Pelosi (D-Calif.) ascribed the stock market’s plunge to the uncertainty emanating from the Trump administration amid the coronavirus crisis.

“We would hope that what is coming out of the White House will be more consistent,” Pelosi said.

By Taylor Telford

March 9, 2020 at 11:38 AM EDT

'Everybody is trying to move at warp speed,’ lawmaker says as Democrats rush paid sick leave effort

House Speaker Nancy Pelosi (D-Calif.) plans to meet Monday evening with key committee chairs to discuss legislation that could provide paid sick leave and other benefits to Americans hurt by the fallout of the coronavirus outbreak.

Rep. Rosa DeLauro (D-Conn.), a senior member of the House Appropriations Committee, told reporters on a conference call that Congress should move forward rapidly with an economic response package and talks are picking up in speed.

“I believe that this is precisely the direction we need to go in. There are the economic consequences from the crisis that are of equal concern as responding on the health care side,” DeLauro said. She added that “everybody is trying to move at warp speed.”

DeLauro floated the policy change to Vice President Pence last week and she said she was told he would present the idea to President Trump. It’s unclear precisely how it would work or what the potential cost might be.

By Erica Werner

March 9, 2020 at 11:02 AM EDT

White House advisers to give President Trump policy options for coronavirus response, including paid sick leave

White House advisers on Monday plan to present President Trump with a list of policy changes they hope could stem the economic fallout of the coronavirus, including paid sick leave and emergency help for small businesses, according to a senior administration official.

The menu of options is expected to be offered to Trump this afternoon when he returns from Florida. The list of potential ideas includes deferring taxes on specific industries hit by the coronavirus downturn, such as the hospitality and travel industries, as well as a “cashflow injection” for small businesses through the Small Business Administration.

The senior administration spoke on condition of anonymity and would not give more details about other options under consideration. The White House has faced intense pressure to arrest falling markets and stabilize an economy that investors increasingly fear may tip into recession. Many Democrats, meanwhile, are insisting that the government implement paid sick leave policies to help Americans who are forced to stay home because they are sick.

By Jeff Stein

March 9, 2020 at 10:58 AM EDT

Dispute between Saudi Arabia, Russia sparks rapid decline in oil prices

Oil prices tumbled below $35 on Monday after Saudi Arabia and Russia in a dispute over production.

The Saudis had been pushing to cut output to prop up prices but reversed their stance when Russia balked and instead decided to flood the market with hundreds of thousands of additional barrels per day at a steep discount — a move analysts fear may trigger a price war.

The Russians believe cutting production would open the door to more American competition by raising prices and reducing supply, said Mikhail Leontiev, a spokesman for the Russian oil giant Rosneft.

“From the point of view of Russian interests, this deal [to cut production] is simply meaningless,” Leontiev told the Ria Novosti news agency Sunday. “We, yielding our own markets, remove cheap Arab and Russian oil from them to clear a place for expensive American shale. And to ensure the efficiency of its production. Our volumes are simply replaced by the volumes of our competitors. This is masochism.”

The Saudi oil company Aramco is offering discounts of between $6 and $8 for delivery in April, it announced late Saturday. Its shares fell below their original IPO price on Sunday for the first time on the Saudi exchange.

″$20 oil in 2020 is coming,” Ali Khedery, a former U.S. official in Iraq and onetime Middle East expert with Exxon, wrote on Twitter. “Huge geopolitical implications. Timely stimulus for net consumers. Catastrophic for failed/failing petro-kleptocracies Iraq, Iran, etc. — may prove existential 1-2 punch when paired with COVID19.”

A production-cut agreement could still happen. An advisory-level OPEC meeting is scheduled for later this month, and the Russians have said they are open to further talks.

By Will Englund

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2020-03-09 15:53:12Z
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Coronavirus in NY: Head of Port Authority Rick Cotton has coronavirus - New York Post

The head of the Port Authority — who has been visiting local airports and other transit facilities — has the coronavirus, Gov. Andrew Cuomo said Monday.

Cuomo said he himself “could have been in contact” with infected PA executive director Rick Cotton but hasn’t been tested because he’s an “improbable positive,” meaning he isn’t likely to have the virus.

Cotton is now quarantined, the governor told reporters.

The PA chief’s team of aides is being tested now, Cuomo said — as he announced that the state total of confirmed cases is now at 142, or 37 more than Sunday.

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2020-03-09 15:58:22Z
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The entire US yield curve plunged below 1% for the first time ever. Here's why that's a big red flag for .. - Business Insider

Foto: Mario Tama/Getty Images

• Investors bought up US government bonds on Monday in response to the growing coronavirus threat and signs of a brutal price war between oil producers.
• The entire US Treasury yield curve fell below 1% for the first time ever as yields on the benchmark 10-year and 30-year bonds slumped to record lows.
• „It signals the market is worried about a global recession and aggressive monetary easing by the Fed,“ one analyst told Business Insider.
• The yield declines came as investors ditched stocks, commodities, and cryptocurrencies and braced for the Federal Reserve to make further cuts to interest rates.
• Visit Business Insider’s homepage for more stories.

Investors plowed cash into US government bonds on Monday as they braced for the global economic fallout from coronavirus and a brutal oil-price war after Saudi Arabia and Russia failed to agree on output cuts.

Surging demand drove up the price of US Treasuries, dragging down their yields and sending the entire yield curve below 1% for the first time ever. The yield on the benchmark 10-year Treasury touched a record low of less than 0.4%, while the 30-year Treasury yield slid below 1% – an unprecedented event.

The falling curve underscores the worsening outlook for the world economy.

„It signals the market is worried about a global recession and aggressive monetary easing by the Fed,“ Neil Wilson, chief market analyst for Markets.com, told Business Insider in an email on Monday.

„It will eventually settle down and the real risk is when rates snap back,“ he added.

Taking cover

The fall in bond yields is a product of investors fleeing volatile markets and seeking shelter in government bonds. They sold off oil and ditched stocks, commodities such as silver and soybeans, and even cryptocurrencies on Monday as they worried about coronavirus hitting global demand and an oil-supply glut.

Moreover, the fact that investors are willing to buy bonds offering record-low yields underlines how worried they are about a global slowdown and a widescale sell-off of higher-risk assets.

Coronavirus – which causes a flu-like disease called COVID-19 – has infected more than 110,000 people, killed at least 3,800, and spread to more than 100 countries. It continues to disrupt global supply chains, interfere with businesses – factories are slashing output, events are being canceled, and retailers are temporarily closing or reducing their opening hours – and hammer demand as consumers stay home.

The epidemic’s sweeping impacts led the Organization of Economic Cooperation and Development (OECD) to warn global growth could slow to 1.5% this year – half the rate it projected in November. Similarly, the International Monetary Fund expects global growth of less than 2.9%, after predicting 3.3% in January.

Bracing for Fed action

When interest rates fall, bond prices tend to rise – driving down yields – as investors chase a better return by moving money into government bonds instead of keeping their cash in the bank and collecting paltry interest.

The scale of the latest yield declines suggests that investors expect the Federal Reserve to cut interest rates again. The US central bank made an emergency cut of 50 basis points to interest rates last week to shore up the economy against coronavirus.

Indeed, futures signal that investors put the odds of another cut this month at 100%, according to Reuters. With rates already at 1% to 1.25%, the Fed has little scope for further cuts before they hit zero. Against that backdrop, a 30-year Treasury yield of about 0.9% starts to look enticing.

The yield declines also suggest investors are expecting the Fed to boost liquidity in market by ramping up its bond purchases, which would drive up their prices and lower their yields.

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2020-03-09 15:46:05Z
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