A new uncertainty, the coronavirus, is dominating investor actions.

Just when the uncertainties of last year seem to be declining, a new fear jumped up last week. The risk of a pandemic from the coronavirus is driving pricing in financial markets. Stock prices dropped on Friday as new cases were reported in the U.S. and the futures indicate a big drop on Monday. Market interest rates dropped below the lower end of their trading range of the last six months. The ten-year was yielding 1.62% early on Monday, well below the 1.75% yield that had represented the low end of its range. The fear is this virus will interrupt trading activity between countries. China may not fulfill its commitment to purchase U.S. products if their economy is affected by this health issue. We have no way of knowing how widespread this virus will become and therefore, what impact it will have on economic growth.

 

PROBANK AUSTIN ADVISOR - JANUARY 27, 2020