The Federal Reserve’s ‘out of meeting’ announcement on Tuesday of an emergency 0.5% rate cut did little to lift the market, as the number of confirmed COVID-19 cases continued to climb, writes Ian Slattery.
The closely watched February payrolls data released on Friday, surprised well to the upside, with employers adding 273,000 jobs. Although the report provided little confirmation of a slowdown this seems almost stale given the virus concerns.
Oil continued to fall finishing at $32 per barrel
European Central Bank (ECB) President Christine Lagarde said in a statement this week that the ECB is “ready to take appropriate and targeted measures” to address the economic impact of the coronavirus. Outside of the Federal Reserve, only two major developed market central banks implemented rate cuts this week. Both the Reserve Bank of Australia and the Bank of Canada cut their policy rates, by 25 and 50 bps, respectively. We expect further monetary and potentially fiscal action from Governments in the week ahead.
All major markets were down last week with global markets falling by -2.9% in local terms and -4.4% in Euro terms. The influential US market was down -3.8% in local terms and -5.9% in euro terms.
Fixed Income & FX
The US 10 year yield finished at 0.5% last week. The German equivalent finished at -0.82%. The Irish 10 year bond yield finished at -0.18%. The Euro/US Dollar exchange rate finished at 1.14, while Euro/GBP finished at 0.87.
Oil continued to fall finishing at $32 per barrel, gold increased to $1,667 per troy ounce and copper decreased to $5,589 per tonne.
The week ahead
Monday 9th March:
- US consumer inflation expectations data released
Tuesday 10th March:
- Chinese Consumer Price Index and Producer Price Index February data released
Thursday 12th March:
- Eurozone ECB Interest rate decision