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Coronavirus – CME will close its Chicago trading floor at end-Friday

  
  Analysis
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Floor will close indefinitely. Globex trade to continue.

  • CME group to close Chicago trading floor as a precaution
  • reopening of trading floor will be evaluated as more medical guidance on coronavirus becomes available
  • will close its Chicago trading floor as of close of business Friday, March 13, 2020, as a precaution to reduce large gatherings
  • no coronavirus cases have been reported on trading floor or in Chicago board of trade building
  • company’s headquarters will remain open
  • all products will continue to trade on CME Globex as they do today.

US stocks post largest one-day gain since December 2018

  
Analysis, US Market
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Big gains in the US and Canada

Daily change:
  • S&P 500 +135 points to 2882, +4.94%
  • Nasdaq +4.95%
  • DJIA +4.4%
  • Toronto TSX +3.1% — biggest gain since 2011
That a 3.1% gain in Canada is the biggest since 2011 is sad on so many levels. That index is below the 2008 highs.
Big gains in the US and Canada

Japan finance minister Aso was asked about the potential for intervention in yen

  
  Analysis
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In response, Aso said that while he had no comment on volatility in the FX market he will respond appropriately depending on market conditions

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In Japan intervention in the currency market is directed by the Ministry of Finance. The bojj Bank of Japan will take the necessary steps in the market, but the directive comes from the Ministry. This is not the case in most other DM central banks, where intervention decisions are taken by the central bank itself (there is often consolation with the relevant government department of course).
In response, Aso said that while he had no comment on volatility in the FX market he will respond appropriately depending on market conditions

US stocks suffer worst day since 2008

  
Analysis, Global Indices
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Closing levels for the main US indexes

Closing levels for the main US indexes
US stocks fell to fresh session lows of 8% late in the day but staged a small bounce late in the day to finish at slightly better levels.
Nonetheless, it was the worst day for US stock markets since 2008 and possibly the worst day ever for oil stocks.
Here is the damage:
  • S&P 500 -7.6% — a 226 point decline to 2746
  • DJIA a 7.8% decline or -2015 points to 23,849
  • Nasdaq -625 points to 7950 — a 7.3% decline
  • Toronto TSX -9.3%
These headlines all sound terrible and this was the worst day for US stocks since December 2008 but when you consider that we’re only back to the June lows, it doesn’t seem that bad. A fall to the 2018 lows would be a decline of 31%.

European major indices end their nightmare of a day

  
Analysis, Global Indices
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Major indices down over 7%

The European stock markets are now close for the day and the nightmare is over.  The major indices all closed over 7% lower.   For the year the declines are near the -20% level. Ouch.
The provisional closes for the major indices are showing:
  • German DAX, -7.4%
  • France’s CAC, -7.9%
  • UK’s FTSE 100, -7.3%
  • Spain’s Ibex, -8.1%
  • Italy’s FTSE MIB, -11.1%
For the trading year, the provisional changes are showing
  • German DAX, -19.8%
  • France’s CAC, -20.67%
  • UK’s FTSE 100, -20.3%
  • Spain’s Ibex, -18.9%
  • Italy’s FTSE MIB, -20.3%
In other markets as London/European traders look to exit:
  • spot gold is down $6.20 or -0.37% at $1667
  • WTI crude oil futures are down $8 or -19.43% at $33.26
In the US stock market:
  • S&P index is down -169 points or -5.7% the 2802
  • NASDAQ index is down -425 points or 4.98% at 8148
  • Dow is down -1600 points or -6.2% at 24263
In the US debt market yields remain sharply lower.
Major indices down over 7%_

CFTC commitments of traders: EURUSD shorts are trimmed but still against the price trend this week

  
Analysis, Forex
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Forex futures positioning data for the week ending March 3, 2020

  • EUR short 87K vs 114K short last week. Shorts decreased by 27K
  • GBP long 35K vs 30K long last week. Longs increased by 5K
  • JPY short 42K vs 56K short last week. Shorts decreased by 14k
  • CHF short 3K vs 1K long last week. Shorts increased by 4K
  • AUD short 52k vs 44K short last week. Shorts increased by 8K
  • NZD short 17K vs 15K short last week. Shorts increased by 2K
  • CAD long 11k vs 15K long last week. Longs increased by 4K

Highlights:

  • The EUR remains the largest speculative position and it is still short, but there was a relatively large liquidation of 27K.  The EURUSD bottomed on February 20. The price has been up 9 of the last 11 trading days.  The squeeze higher seems to have led to some liquidation of the short positions. Traders are still offsides given the recent sharp move back higher.
  • The JPY has been getting stronger as stocks and rates tumbled.  The USDJPY is trading at the lowest level since August 27 (higher JPY).  Speculative positions remain short JPY (long USD), and losing money.  Like the EUR, the position has been trimmed but traders remain short the JPY (long the USD) and against the price trend this week.
  • The AUD has moved higher off the low from last Friday. Speculative positions in the AUD saw an increase of 8K in the net short position. The short is losing against the rising value of the AUD this week.
  • The speculative position in the GBP (Long 35K) is benefiting this week as the GBPUSD has marched higher last Friday’s low.

Forex futures positioning data for the week ending March 3, 2020

Another sharp day down in the major US indices

  
Analysis, PODCAST, US Market
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Yields fall to new lows

The risk off flows continued in the US stock market and debt market.
The Dow industrial average was down over 1000 points at 1 point during the day. The S&P index fell below the 3000 level briefly before rebounding in the last hour of trading.
In the US debt market yields resumed their downward bias after yesterdays modest rebound.
The final numbers for the major indices are showing:
  • S&P index -106.18 points or -3.39% at 3023.94. The low price extended to 2999.83. The high was up at 3083.04
  • NASDAQ index fell -279.49 points or -3.10% at 8738.59. The low price reached 8677.387. The high price extended to 8921.078
  • Dow industrial average fell minus this 969.58 points or -3.58% at 26121.28. The low price extended to 25943.33. The high price reached 26671.92
In the US debt market the 10 year yield fell to a new record low level of 0.898%. It is currently trading at 0.91%. That is still down -14.2 basis points on the day. The yield curve flattening a bit to 32.49 basis points from close to 36 basis points the close yesterday, but all maturity levels fell by over -10 basis points.

US yields tumbled lower

China Securities Journal: PBOC may cut OMO rates this month

  
  Analysis
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People’s Bank of China open market operations are one tool used to manage liquidity

  • rates may be cut this month reports the CSJ
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China Securities Journal is a national securities newspaper – part of official Xinhua News Agency.

US stocks catch a big bid in the final 15-minutes of trading to limit the damage

  
Analysis, US Market
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Dramatic move late

The S&P 500 finished the day down just 24 points at 2954 in a big win for the bulls late in the day.
The index gained more than 70 points in the final 15 minutes of trading in a huge bid, that was likely helped by month-end rebalancing. The huge rallies in bond and selling in stocks this month left pensions and other balanced funds heavily overweight bonds, so they’re forced to buy to get back on target.
There may also be hopes for an emergency Fed cut on the weekend or some good coronavirus news. There’s no doubt the market could have overshot this week, with the S&P 500 posting its worst weekly performance since October 2008 — when Lehman Brothers collapsed.
The intraday chart shows the huge reversal that kicked off a test of the earlier low of 2880.
SPX
On the day:
  • S&P 500 -25 points to 2954 (-0.8%)
  • Nasdaq – flat
  • DJIA -1.4%
On the week:
  • S&P 500 -11.5%
  • DJIA -12.4%
  • Nasdaq -10.5%
The weekly chart is still ugly but at least the bulls have some lift as we closed off the weekly lows:
SPX weekly
We will have to get back above the 200-dma at 3046 to generate any real optimism.

Bank of America revises global GDP forecast to weakest since 2009

  
Analysis, Economy
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Thursday note from Bank of America / Merrill Lynch

  • Project global growth for 2020 at 2.8%
  • slowest since 2009
  • Expect China to be weakest since 1990
And …
  • risks are still skewed to the downside
  • Our forecasts do not include a global pandemic that would basically shut down economic activity in many major cities
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And, just thinking out loud …. does the coronavirus mean the yield curve inversion was right all along?
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