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Market Brief – Friday 3/27/20

Stocks fell in overnight trading, cutting yesterday’s gain in half. Buyers were active in early trading but were unable to gain much traction. Treasury yields fell in overnight trading and were slowly falling in early trading. Crude oil fell below $22 per barrel in overnight trading after Saudi Arabia said there were no talks with Russia to balance the oil markets.

Personal Consumption Expenditures (PCE) rose +0.1% in February and +1.8% from this time last year, which is below the Fed’s 2.0% target. Excluding food and energy, Core PCE rose +0.2% in February and +1.8% from this time last year. Personal income rose +0.6%, personal spending rose +0.2% and inflation-adjusted personal consumption rose +0.1% in February as consumers began saving over fears of the Coronavirus.

The University of Michigan’s Consumer Sentiment fell to 89.1 in March from 95.9. This was the largest one month drop in sentiment since October 2008. Current conditions fell to 103.7 in March from 114.8 and consumer expectations fell to 79.7 in March from 92.1 as consumer optimism slumped alongside stock prices. Inflation expectations fell to 2.2% in March from 2.4%.

After fighting back against its overnight losses, stocks were dumped in the final 45 minutes of trading as bond prices broke higher as short sellers were squeezed out of their trades. It appears nobody wants to hold stocks over the weekend out of fears the number of Coronavirus cases could explode higher.