By Andre Botha, Senior Dealer, TreasuryONE
As analysts attempt to assess the ultimate impact the Coronavirus and now the oil price war will have on the global economy, markets remain under pressure. Fears of a global recession have seen volatile markets with wild swings in prices and a general flight to safe-haven assets. Wall Street closed sharply down yesterday after trading was temporarily halted when the indices fell over 7.0%.
The Dow had its biggest decline in terms of points ever and closed down by 7.79%(see graph). The Nasdaq and S&P ended the day 7.29% and 7.60% in negative territory while the 10y yield fell to record low of 0.318% and the 30y yield to 0.702%.
The Treasury yields have recovered this morning to 0.657% and 1.089% as markets stabilise in Asia this morning. Asian stock markets and US futures are all in the green this morning while the Dollar is a touch stronger against the Euro, Pound and Yen on the higher bond yields and likely further central bank stimulus measures. President Trump is also considering tax cuts to boost the US economy while the Fed added an additional $50 billion worth of liquidity to markets yesterday.
The Dollar is currently trading at 1.1365 against the Euro, the Euro/USD pair has traded like an EM currency in the past month as can be seen by the graph above. Not even the US dollar has escaped the recent sell-off. EM currencies have also recovered this morning, with the Russian Ruble up over 1.0% and the Mexican Peso up 0.4%. The Rand is trading at 15.8600 this morning after having closed at 16.0800 last night.
Gold is softer this morning at $1 657.80 while Oil is off yesterday’s lows at $37.00.