(Bloomberg) – US stocks fell and Treasury bonds surged as investors feared that the Federal Reserve’s emergency cutoff was not enough to combat the economic impact of the coronavirus.
The S&P 500 fell for the eighth time in nine days after the Federal Reserve cut its benchmark rate by 50 basis points. Fed President Jerome Powell said at a press conference that the US economy remains strong but that the virus epidemic will weigh on activity “for a while”.
The two-year Treasury yield fell to 0.70%, while the 10-year rate plunged below 1% for the first time. Banks led losses on the stock indexes.
“Does a reduction of 50 basis points make a difference? It’s a difficult question to answer, “said Subadra Rajappa, head of Societe Generale’s pricing strategy for the United States. “The Fed cuts tend to be less effective in situations like this when there is a supply and demand shock.”
Investors had accumulated risky assets last week as the spread virus threatened to derail global growth, before slipping back on Monday in anticipation of concerted action by Group of Seven officials. Oil dampened its rebound Tuesday, approaching $ 46 a barrel, while gold rose. The yen was higher than the dollar.
“Going from meeting to meeting with higher-than-normal interest rate cuts seems like Fed officials panicked as much as stock market investors last week,” said Chris Rupkey, chief financial economist MUFG Union Bank. “They didn’t have to be as aggressive and the Fed under Powell continues to be wrong in our opinion more to the financial markets than to the economy at large. We are not in a recession yet and today’s decision will not prevent it from coming. “
The OECD has warned that growth will reach levels not seen in more than a decade and that more and more companies are warning about the impact of the disease.
Bank of England Governor Mark Carney has said he will take whatever steps are needed to help the economy. Australia has lowered its benchmark by a quarter of a percentage point. However, its currency has increased, which shows how quickly traders’ expectations have changed in recent days.
These are the main movements on the markets:
stocks
The S&P 500 fell 2.8% at 4 p.m. New York Time.The Dow Jones Industrial Average fell 2.96%. The Stoxx Europe 600 index gained 1.4%. The MSCI Asia Pacific index rose 0.5%.
Currencies
The Bloomberg Dollar Spot index lost 0.4%, the euro gained 0.4% to $ 1.1178, the pound gained 0.5% to $ 1.2812 and the Japanese yen fell firmed 1% to $ 107.23.
Obligations
The 10-year Treasury bill yield fell 16 basis points to 1%. The two-year rate fell 20 basis points to 0.70%. Germany’s 10-year yield fell two basis points to -0.64%.
Raw materials
Gold futures added 2.7% to $ 1,637.10 an ounce. West Texas Intermediate crude oil rose 1.1% to $ 47.24 a barrel.
– With the help of Sophie Caronello.
To contact journalists on this story: Vildana Hajric in New York at [email protected]; Katherine Greifeld in New York at [email protected]
To contact the editors responsible for this story: Jeremy Herron at [email protected], Randall Jensen, Sam Potter
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© 2020 Bloomberg L.P.
(Bloomberg) – US stocks fell and Treasury bonds surged as investors feared that the Federal Reserve’s emergency cutoff was not enough to combat the economic impact of the coronavirus.
The S&P 500 fell for the eighth time in nine days after the Federal Reserve cut its benchmark rate by 50 basis points. Fed President Jerome Powell said at a press conference that the US economy remains strong but that the virus epidemic will weigh on activity “for a while”.
The two-year Treasury yield fell to 0.70%, while the 10-year rate plunged below 1% for the first time. Banks led losses on the stock indexes.
“Does a reduction of 50 basis points make a difference? It’s a difficult question to answer, “said Subadra Rajappa, head of Societe Generale’s pricing strategy for the United States. “The Fed cuts tend to be less effective in situations like this when there is a supply and demand shock.”
Investors had accumulated risky assets last week as the spread virus threatened to derail global growth, before slipping back on Monday in anticipation of concerted action by Group of Seven officials. Oil dampened its rebound Tuesday, approaching $ 46 a barrel, while gold rose. The yen was higher than the dollar.
“Going from meeting to meeting with higher-than-normal interest rate cuts seems like Fed officials panicked as much as stock market investors last week,” said Chris Rupkey, chief financial economist MUFG Union Bank. “They didn’t have to be as aggressive and the Fed under Powell continues to be wrong in our opinion more to the financial markets than to the economy at large. We are not in a recession yet and today’s decision will not prevent it from coming. “
The OECD has warned that growth will reach levels not seen in more than a decade and that more and more companies are warning about the impact of the disease.
Bank of England Governor Mark Carney has said he will take whatever steps are needed to help the economy. Australia has lowered its benchmark by a quarter of a percentage point. However, its currency has increased, which shows how quickly traders’ expectations have changed in recent days.
These are the main movements on the markets:
stocks
The S&P 500 fell 2.8% at 4 p.m. New York Time.The Dow Jones Industrial Average fell 2.96%. The Stoxx Europe 600 index gained 1.4%. The MSCI Asia Pacific index rose 0.5%.
Currencies
The Bloomberg Dollar Spot index lost 0.4%, the euro gained 0.4% to $ 1.1178, the pound gained 0.5% to $ 1.2812 and the Japanese yen fell firmed 1% to $ 107.23.
Obligations
The 10-year Treasury bill yield fell 16 basis points to 1%. The two-year rate fell 20 basis points to 0.70%. Germany’s 10-year yield fell two basis points to -0.64%.
Raw materials
Gold futures added 2.7% to $ 1,637.10 an ounce. West Texas Intermediate crude oil rose 1.1% to $ 47.24 a barrel.
– With the help of Sophie Caronello.
To contact journalists on this story: Vildana Hajric in New York at [email protected]; Katherine Greifeld in New York at [email protected]
To contact the editors responsible for this story: Jeremy Herron at [email protected], Randall Jensen, Sam Potter
bloomberg.com“data-reactid =” 43 “> For more articles like this, please visit us on bloomberg.com
Subscribe now to stay one step ahead of the most trusted source of business information. “data-reactid =” 44 “> Subscribe now to stay ahead with the most trusted source of business information.
© 2020 Bloomberg L.P.