e funds to provide free everything to everybody else. Getting everything for free trumps freedom, according to Bernie. No wonder investors are reacting to him as though he is going to infect us all with the virus of socialism.*
The bounceback in stocks on Wednesday came after the Fed jolted markets with a half-a-percentage-point rate cut on Tuesday, saying that while the economy’s fundamentals remain strong, the “coronavirus poses evolving risks to economic activity.” Investors are now encouraged by other global central banks following suit, with the Bank of Canada also lowering rates by half a percentage point to 1.25%.
*On the fiscal front, a bipartisan group of U.S. lawmakers reached a deal to provide a roughly $8 billion emergency funding package to fight the spread of the coronavirus domestically. Also, California now has reported 51 confirmed cases, the most of any state, while Los Angeles declared a local state of emergency.*
“Any little bit of good news, or bad news, regarding some mix of politics and viral information, is going to be moving the markets pretty dramatically,” said an expert.
But he also warned that the coronavirus spread remains a big threat, particularly since the Pacific Northwest and California still appear to be in the early stages of documenting cases. “It’s possible we have numbers in the community that are going to make it difficult to stop without pretty dramatic social distancing,” he said. “The economic costs really come from social distancing measures.”
*Some good U.S. economic data also improved investor sentiment. Automatic Data Processing Inc. reported private-sector employers added 183,000 jobs in February, coming ahead of the closely watched Labor Department report on nonfarm payrolls, on Friday. Meanwhile, the Institute for Supply Management reported its nonmanufacturing gauge in February rose to 57.3% from 55.5% in the previous month, suggesting that the services sector had yet to feel the blow from the coronavirus.*
*St. Louis Fed President James Bullard on Wednesday said the Fed’s policy was on point, while appearing to downplay expectations of a subsequent cut when the central bank formally meets on March 17-18. “We got the policy rate to the right place for now, given the information we have now,” he said, in an interview on Bloomberg Television.*
But the Fed’s Beige Book showed the first negative impact of the global coronavirus outbreak on the domestic economy.
Investors are anxious for promised action by the Group of Seven to confront the virus while they’re buying risk assets on dips and watching the world’s biggest bond market move closer to negative yields. The Democratic contest posed a fresh challenge to Trump as 10 states went to Biden, who’s positioned as a moderate against a more progressive Sanders in the race for the party’s nomination to take on Trump in November.
Volume on U.S. exchanges was 11.04 billion shares, compared with the 10.00 billion average over the last 20 trading days.
*Currencies*
• The Bloomberg Dollar Spot Index increased 0.2%.
• The euro decreased 0.6%.
• The British pound rose 0.1%.
• The Japanese yen weakened 0.2%.
*Bonds*
• The yield on 10-year Treasuries rose three basis points to 1.03%.
• The yield on two-year Treasuries fell three basis points to 0.67%.
• Germany’s 10-year yield fell one basis point to -0.63%.
*Commodities*
• West Texas Intermediate crude fell 0.2% at $47.07 a barrel.
• Gold fell 0.2% to $1,637.47 an ounce.
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