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March 2020
Market Update
(all values as of 04.30.2024)

Stock Indices:

Dow Jones 37,815
S&P 500 5,035
Nasdaq 15,657

Bond Sector Yields:

2 Yr Treasury 5.04%
10 Yr Treasury 4.69%
10 Yr Municipal 2.80%
High Yield 7.99%

YTD Market Returns:

Dow Jones 0.34%
S&P 500 5.57%
Nasdaq 4.31%
MSCI-Europe 2.05%
MSCI-Pacific 1.82%
MSCI-Emg Mkt 2.17%
US Agg Bond 0.50%
US Corp Bond 0.56%
US Gov’t Bond 0.48%

Commodity Prices:

Gold 2,297
Silver 26.58
Oil (WTI) 81.13


Dollar / Euro 1.07
Dollar / Pound 1.25
Yen / Dollar 156.66
Canadian /Dollar 0.79

Macro Overview

Capital markets worldwide experienced volatility as the impact of the (COVID-19) coronavirus continues to evolve. Economic forecasts for China were revised downward by the International Monetary Fund (IMF) and the World Bank as factory closures, quarantines, and travel bans continue to weigh on numerous industries.

The Federal Reserve moved to soothe markets with a rare emergency meeting that resulted in a rate reduction announcement. The rate cut was intended to maintain liquidity and structure in an environment of uncertainty caused by the virus outbreak. Fed Chairman Jerome Powell noted that “the fundamentals of the U.S. economy remain strong,” yet the coronavirus may pose evolving risks. Yields on Treasuries fell to historical lows as funds migrated from equities to fixed income securities, driving bond prices up. 

U.S. equities registered their largest weekly losses since 2008, with $3.6 trillion worth of stock values erased within the last week of February; the rapid decline affected all sectors and industries. Similarly, global equity markets saw losses as both developed and emerging market equities gave up gains. Global equity valuations retreated due to uncertainty surrounding the extent of the outbreak and its effects on the global economy. Analysts are closely following companies with supply chains tied to China, which has become a focus of concern.

Due to globalization, supply chains with exposure to China are experiencing shortages as the virus takes its toll. In the event that a vaccine emerges, shortening the coronavirus outbreak period, then pent-up demand could propel economic activity higher.

The National Center for Biotechnology Information reports that advancements in medical technology over the years have enabled scientists to develop and produce virus-combating vaccines at a faster pace than previously possible.

The impact of the coronavirus can be put into perspective with a comparison to influenza, also known as the flu, which has affected over 32 million Americans over the past year. Flu-related deaths in the United States are estimated to reach between 18,000 and 46,000 this flu season alone, as reported by the Centers for Disease Control. The center also estimates that as many as 45 million Americans will suffer flu-related symptoms and illnesses during this year’s season. (Sources: IMF, World Bank, Fed, U.S. Treasury, NCBI, CDC)

the flu will cost the healthcare system and society $11.2 billion this flu season

Equities Slump As Concern Rises – Stock Market Overview

February saw stock valuations retreat to levels previously seen in July and August 2019. Analysts believe that the pullback likely tempered several previously overvalued stocks. Valuations are now considered to be more in line with historical standards, relative to where they were at the beginning of the year. The final week of February saw all equity indices fall, as the S&P 500 Index slumped 11.49%, the Dow Jones Industrial Index fell 13.6%, and the tech-heavy Nasdaq Index gave up 10.54%. 

The pullback among all major equity indices was rapid by historical standards, but served to reign in valuations considered lofty by certain analysts. Fortunately, the stellar performance of equity markets in 2019 is serving as a buffer for the dramatic pullback, with equity levels still considerably higher than levels investors experienced at the end of 2018. 

When U.S. equity markets fell 14% over two months in 2003 during the SARS outbreak, interest rates were much higher, with the 10-year Treasury yielding over 3.5%. The yield on the 10-year Treasury on Feb 28th at 1.13% is lower than the current S&P 500 Index yield for stock dividends at 1.97% on February 28th. Analysts view the yield difference as a benefit for stocks due to yield-seeking investors. (Sources: S&P, Dow Jones, Nasdaq, Bloomberg, U.S. Treasury)

Treasury Bond Yields Drop To Historic Lows – Fixed Income Update

Treasury bond yields traded at record low levels, driven by global investors seeking safe haven assets. All Treasury maturities yielded well below 2% at the end of February, lower than the Fed’s inflation target of 2%. The dramatic drop in yields brought the 10-year Treasury bond yield to 1.13 % at the end of February, the lowest yield for the 10-year Treasury on record. An insatiable demand for global bonds brought yields lower across all bond sectors, delivering positive returns for bonds in nearly every sector to date this year.

The Federal Reserve reduced the Fed Funds rate, a key monetary tool rate, following a rare emergency meeting. The rate reduction was made with the objective of alleviating market uncertainty and shoring up liquidity for extended periods of volatility. The announcement contributed to the drop in bond yields. (Source: U.S. Treasury)

Economic Cost of The Flu – Domestic Economy

In an attempt to gauge how a virus may affect the U.S. economy, the National Center for Biotechnology Information monitors and tracks the economic costs related to influenza every year.

The estimated average annual total financial burden of the flu to the healthcare system stands at $11.2 billion, which includes medical expenses such as hospitalization, physician visits, and vaccines. A growing concern related to the coronavirus is the productivity cost associated with employee absenteeism, business travel restrictions, and other amplified preventive measures. Influenza viruses have historically inflicted companies in all industries with notable productivity costs. (Source:

the SARs virus resulted in 774 deaths in 17 countries

U.S. Household Size Shrinks – Demographics

Family size is shrinking in the U.S., with only 2.52 members per household on average in 2019, making it the smallest size ever in the country’s history. Historical data tracked by the U.S. Census Bureau showed an average family size of 5 in 1880, double today’s numbers. The decline in family size is believed to be attributable to various economic and social changes over the decades.

Roughly 63% of households in the U.S. consist of two or fewer family members. The Census Bureau also tracks family size by state. Utah has the largest household size at 3.12 family members, while Maine has the lowest at 2.28 members.

Smaller households emerged over the past 60 years, with one-person households accounting for 28.4% of the U.S. total in 2019, up from 13.1% in 1960. Households of four or more decreased from 40.2% in 1960 to 22.1% in 2019, dropping by nearly half. (Sources: U.S. Census Bureau, Historical Statistics of the United States)

Past Pandemics & What Came Of Them – Health Overview

Over the centuries, pandemics have evolved and lasted for varying periods of time, always resulting in the containment and/or elimination of a virus. Should history repeat itself, a vaccine will eventually emerge to combat the COVID-19 virus, alleviating the immediate threat of further contamination.

Since the year that Severe Acute Respiratory Syndrome (SARS) emerged as a global threat, advancements in medical technology have drastically reduced the time it takes to develop and implement a vaccine after a new virus emerges. The current coronavirus outbreak was preceded by two similar outbreaks since the turn of the millennium, SARS and Middle East Respiratory Syndrome (MERS). SARS originated in China in 2002, spread worldwide and was contained within a few months. The World Health Organization (WHO), which tracks deaths related to pandemics globally, found that the SARs virus resulted in 774 deaths in 17 countries. MERS, also known as the camel flu, resulted in 862 deaths.

Joint efforts among international governments and nonprofit research entities have yielded extensive research on emerging infectious diseases worldwide. Several collaborating health organizations, companies, and scientists from various countries have undertaken the task to attempt to develop a vaccine for COVID-19. (Sources: The National Center for Biotechnology Information, WHO)

China accounts for roughly 16.3% of global GDP

China’s Share In The Global Economy – Global Trade

The global spread of the coronavirus has affected consumers in countries across the globe, curtailing demand for products mainly manufactured in China. It is expected that as worldwide demand for Chinese products decreases, the country’s primary economic component, manufacturing, will abate, thus hindering the country’s economic expansion.

Based on 2019 data, the top five economies in the world as ranked by gross domestic product (GDP) are the U.S., China, Japan, Germany, and India. These five countries account for 55% of the $86.31 trillion total global GDP. China accounts for roughly 16.3% of global GDP and is referred to as “the world’s factory,” producing a broad range of items from shoes and hammers to smart phones and computers. The country’s enormous manufacturing base enables it to export massive volumes of goods globally, meeting demand from nearly every consumer in the world. China experienced exponential growth over the past few decades, from a GDP of $305 billion in 1980 to over $14 trillion this past year, making it the second-largest economy after the United States. The difference in GDP between the two nations’ economies has been shrinking over the years, as Chinese economic growth has consistently outpaced that of the United States. (Source: World Bank)

Sudden Drop In Mortgage Rates Boosts Housing – Housing Market Update

The abrupt drop in interest rates has brought about a boost to the housing market in the form of lower mortgage rates. The rate for a conforming 30-year mortgage loan fell to 3.45% at the end of February, nearly a full percentage point lower than a year earlier. 

Falling interest rates have prompted an increase in mortgage activity, as the cost to borrow for homebuyers has become less expensive. Mortgage rates fell in late February, approaching the lows last seen in October 2012 when the rate for a conforming 30-year loan was 3.37%. One resulting challenge for many homebuyers is the fact that home prices are rising throughout many geographic regions in the country. Although mortgage rates have dropped, housing prices are still elevated to levels that prompt many prospective homebuyers to wait and rent until housing prices drop.

Mortgages accounted for two-thirds of the $14 trillion balance of U.S. household debt in the last quarter of 2019. Mortgage rates tend to be correlated with 10-year Treasury bond yields, rather than with the short-term rates controlled by the Federal Reserve, because mortgages are typically paid off over several decades. (Sources: Federal Reserve Bank of St. Louis, Freddie Mac)