Volatility Continues, Energy Market Spirals, and Bonds Sound More Warnings

To many people’s shock, stocks ended last week slightly higher, likely thanks in part to Friday’s strong jobs report. The coronavirus had yet to become a global economic threat last month though, so the March and April reports may tell a very different story… especially in light of how global manufacturing just took its hardest hit since the financial crisis. And it wasn’t good news for all sectors; energy prices got clobbered and fell to multi-year lows following Russia’s rejection of the proposed production cuts, and the market effects were substantial on oil producing nations. The bond market is still sending warning signals as the 10-year U.S. Treasury yield dropped below 0.7% for the first time ever, coming in at 0.676%. The Fed is doing its best to counter the slowdown with last week’s emergency rate cut and continued bond purchases, but they’ve already unwound more than half of the QE reversal started in 2017—how much more room do they have to intervene? It may soon get tight, as even the high-yield market has gotten in on the action and has been sending warning signals of its own…