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Commodities: According to the BofAML FMS monthly survey, global fund managers started the year overweight commodities (highest in eight years). Based on the charts above, these positions didn’t work out well. Nonetheless, once the coronavirus scare eases, we may see a rebound in some commodity markets.
Equities: The VIX curve inverted on Monday (in the front end), which tends to happen during periods of uncertainty. (The VIX Curve assigns a value for how much investors are uncertain, the higher the number means the higher the uncertainty. Usually, the curve is upward-sloping because the farther away something is, the more uncertain you are in properly valuing it. With an inversion however, investors are viewing the near-term to be more uncertain/volatile than the future. For reference, this happened in August 2019 as well.)
Rates: The kink in the Treasury curve is back.
The market is now pricing in the possibility that the Fed will cut rates more than once this year.
Here is the change in the fed funds rate trajectory implied by the futures markets.
The Eurozone: According to TS Lombard, if German companies are unable to raise prices, they could face a squeeze on their earnings.
The United States: Growth in business (C&I) loans slowed substantially in recent weeks despite loosening lending standards. It’s worth noting that some analysts view C&I credit as a lagging indicator.
Food for Thought: Getting news from social media sites:
Edited by Devon Lall
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