Market Brief – Tuesday 1/21/19

Stocks fell in early trading as fears of the SARS-like virus outbreak will curb travel plans over Chinese New Year, which is the busiest time for Chinese to travel. Treasury yields fell in early trading on light volume as sellers have disappeared. Five-year Treasury yields fell through their 100-day moving average, while 10- and 30-year yields were flirting with their respective 100-DMAs as yields fell in early trading.

The New York Fed accepted bids for $58.626 billion of overnight dollar loans and $32.150 billion of 14-day term dollar loans as the dollar liquidity problem persists. The New York Fed also purchased $1,801 billion of Treasury Bills against offers of $12,811 making the offer oversubscribed by 7.1 times.

Stocks closed the day lower after the Coronavirus arrived in Seattle when a passenger from China was found to be infected. Treasury bonds rallied and closed near their 2020 highs as Treasury yields closed below their respective 100-day moving averages, expect 10-year Treasury yields which closed just above. A close below a major moving average suggests the trend will continue, meaning yields are likely to continue falling.

Boeing broke a multi-year level of support after the FAA issued a statement rejecting Boeing’s timeline for the return of the 737 MAX as the FAA has no timeline for the plane to return to service. Crude oil also fell, along with oil and gas producing stocks, on fears the Coronavirus will lead to less travel, and less demand.