March 2020 – Review of the Markets and Economy
The spread of the coronavirus globally continues to negatively impact both supply chains and product demand, leading to lower economic and earnings projections.
As investors have shifted from a “risk on” to a “risk off” orientation, ten and thirty-year Treasury yields have fallen to all-time lows. The spread between Treasuries and corporate bonds has widened, particularly in the high yield market.
As is generally the case, the stock prices of companies viewed to be less exposed to reduced earnings have fared the best in the market decline.
OPEC’s inability to reach an agreement to cut production last week has led Saudi Arabia to cut the price they are selling their oil, causing a huge decline in the commodity.
The decline in energy prices should be a positive for businesses that use energy, as well as for individuals.
The decline in interest rates should provide an opportunity for corporations and consumers to lower their borrowing costs.
The quality orientation of clients’ investment portfolios should provide resilience in the uncertain, volatile market conditions.
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