March 9, 2020 Headlines

The rout in global risk markets continued overnight. Major Asian and European equity indices are down 4-8%, and U.S. equity futures are down nearly 5% ahead of the open. Additionally, a potential pricing war between Russia and Saudi Arabia has sent oil prices plunging as much as 31%, the worst daily decline since 1991. Both countries are poised to flood the market with supply at a time when demand is waning amid the coronavirus outbreak. Treasuries are the primary beneficiaries of the global market meltdown, with long-end yields down 30-40 bps on the day (10yr yield at 0.42%). Rates markets continue to price for a significant stimulus response from global policymakers, including the Fed sending the funds rate to the zero bound in the coming weeks/months. The question now is how quickly can the virus be contained? If the virus continues to spread into Q3, a global recession is a much higher probability. If new cases peak in April/May, there’s a better chance for a strong recovery in 2H 2020, particularly for the U.S. The uncertainty with regards to both scenarios is fueling the sharp sell-off in risk markets, and backwards-looking economic data like the February jobs report doesn’t have much relevance at this point.

Jason Haley
Chief Investment Officer

3/10/2020NFIB Small Business Optimism103104.3
3/11/2020MBA Mortgage Applications15.10%
3/11/2020Real Avg Hourly Earning YoY0.60%0.50%
3/11/2020CPI MoM0.00%0.10%
3/11/2020CPI Ex Food and Energy MoM0.20%0.20%
3/11/2020CPI YoY2.20%2.50%
3/11/2020CPI Ex Food and Energy YoY2.30%2.30%
3/11/2020CPI Index NSA258.493257.971
3/11/2020CPI Core Index SA266.913266.476
3/11/2020Real Avg Weekly Earnings YoY0.00%
3/11/2020Monthly Budget Statement-$234.5b-$234.0b
3/12/2020PPI Final Demand MoM-0.10%0.50%
3/12/2020PPI Ex Food and Energy MoM0.10%0.50%
3/12/2020PPI Ex Food, Energy, Trade MoM0.10%0.40%
3/12/2020PPI Final Demand YoY1.80%2.10%
3/12/2020PPI Ex Food and Energy YoY1.70%1.70%
3/12/2020Initial Jobless Claims220k216k
3/12/2020PPI Ex Food, Energy, Trade YoY1.50%
3/12/2020Continuing Claims1733k1729k
3/12/2020Bloomberg Consumer Comfort63
3/12/2020Household Change in Net Worth$574b
3/13/2020Import Price Index MoM-1.00%0.00%
3/13/2020Import Price Index ex Petroleum MoM0.10%0.20%
3/13/2020Import Price Index YoY-1.50%0.30%
3/13/2020Export Price Index MoM-0.40%0.70%
3/13/2020Export Price Index YoY0.50%
3/13/2020Bloomberg March United States Economic Survey
3/13/2020U. of Mich. Sentiment95101
3/13/2020U. of Mich. Current Conditions113114.8
3/13/2020U. of Mich. Expectations88.292.1
3/13/2020U. of Mich. 1 Yr Inflation2.40%2.40%
3/13/2020U. of Mich. 5-10 Yr Inflation2.30%



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