News, analysis and comment
By Logan Robertson and Thomas J. Connelly, CFA, CFP®
March 23, 2020
The US equities market sinks lower; the S&P 500 index now sits more than 30% down year-to-date. Other major country indices are performing similarly. Yields on US 10-Year Treasuries have fallen nearly 120 basis points over the same period, currently at 0.717%.
The scramble away from Emerging bonds and into US dollars continues, pushing yields on the bonds upward. Gold rallied an impressive 4% today, barely turning positive on the year. Private Lending and Reinsurance remain slightly positive, but future returns and perhaps distributions from private lending will be adversely affected by the slowing economy.
The Federal Reserve is acting aggressively to ensure liquidity remains ample in many critical funding markets. In addition to purchasing Treasury bills/coupons and agency MBS, the Fed is now extending purchases to short-dated muni bonds and commercial paper. In essence, the Fed is printing money to fund the operation of local governments and corporations. The program will continue for one year, surely sending the Fed balance sheet to highs never before seen.
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