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Market Brief – Thursday 2/13/20

Stocks started the day lower on fears the Coronavirus is spreading, but U.S. investors have no fear and eagerly bought the dip. Treasury yields fell in overnight trading on the same news but moved back to their prior night’s close after the CPI came in hotter than expected. After flirting with $50 per barrel, crude oil rallied over $51 per barrel on the same news.

The Consumer Price Index rose +0.1% in January and +2.5% from this time last year. Excluding food and energy, the CPI rose +0.2% in January and +2.3% from this time last year. Inflation-adjusted wages rose +0.1% in January but were flat from this time last year.

Initial jobless claims rose slightly to 205k and the 4-week moving average for initial claims held steady at 212k. Continuing jobless claims fell to 1,698k, indicating workers are finding jobs even as employers pull job openings.

The New York Fed accepted bids for $48.85 billion of overnight dollar loans and bids for $30 billion of 14-day term dollar loans against offers of $59.02 billion, making this the fourth oversubscribed term loan this year.

Today’s 30-year $19 billion Treasury Bond auction was met with strong demand as foreign bidders took 61.5% of the auction and domestic bidders took 19.4% of the auction, leaving securities dealers with 19.1% of the auction. This was the lowest recorded yield for a 30-year Treasury auction. Treasury yields were fell following the auction.

Stocks closed slightly lower on the day as the Fed announced they were cutting back the size of their term dollar loan program starting next week. Treasury yields fell on the same news.