Bond Yields Crash and Gold Soars on Pandemic Threat

Mish

The 30-year long bond yield crashed to a record low, gold jumped, and equities hammered as fears of a pandemic mount.

The stock market has finally come to grips with the notion the coronavirus is not contained. Cases are rising exponentially in South Korea, Italy, Japan, and Iran.

Equities Smashed, Gold Jumps

  • S&P 500: -3.2%
  • Nasdaq: -3.74%
  • Dow: -3.14%
  • Gold: +$26 to $1675, +1.59%
  • West Texas Crude: -$2.66 to $50.72, -4.98%

Numbers from 11:00 AM Central.

30-Year Bond Yield at New Record Low

Recession Bells Yet Again

The above chart is from Friday.

Inversions do not look as tight because in the prior two recession the 30-year bond inverted with the 3-month.

Even with today's record low move there is still 23 basis points of spread between the 30-year and the 3-month yield.

There is also 45 basis points between the 30-year and 10-year.

Largest Shipping Decline Since 2009

Please note we have already witnessed the Largest Shipping Decline Since 2009 and That's Before Coronavirus hit.

Recession is calling.

Mike "Mish" Shedlock​

Comments (29)
njbr
njbr

Monetary policy crashes into demand destruction.

No. 1-10
Sechel
Sechel

Getting harder and harder to justify owning any bonds and certainly long duration ones. Might as well just keep it in cash if you are risk averse

Maximus_Minimus
Maximus_Minimus

Already outdated chart, the Dow crossed the 1000 down. If the money is fleeing the stock market, bond yields down, where is the money flowing?

Bohm-Bawerk
Bohm-Bawerk

Looks like the market finally noticed the virus. I guess hitting South Korea and Italy over the weekend woke the bear from hibernation.
Does anyone else see the irony in the fact that a virus (extremely tiny molecule) is bringing the world economy to its knees? Really giant balloon, meet extremely fine needle... pop.

1 Reply

Ken Kam
Ken Kam

Reminds me of 'The War of the Worlds' by HG Wells, circa 1896. Humans are getting wallopped by an alien race when they invade Earth. In the end, the aliens succumb to an earth virus for which they have no immunity and the human race survives. The power of a tiny molecule, indeed!

Carl_R
Carl_R

As of right now, SPX is about even with the beginning of the year, DJIA is down 2%, RUT is down 3%, and DJTA is down 4%. Meanwhile, DJUA is up 8%. Yes, it's an off day, but considering that we aren't far at all from where we were 2 months ago when no one had even heard of SARS-COV-2, there could be a lot more to come.

The worst day ever for the Dow is off 22.6%. Number 20 on the list of worst days is off 6.91%. We aren't even at half that. There may well be a panic ahead, but this isn't even close...yet.

Escierto
Escierto

The miners don’t believe in this gold move. GDX should be pushing $40 and it can barely get past $30. Short term hysteria with no staying power.

St. Funogas
St. Funogas

Hard to believe all the CoV talk here this past month and nobody is mentioning Biotech stocks today! Go biotechs!

VXRT up 16%
NNVC up 36%
GNPX up 20%
CODX up 6%

truthseeker
truthseeker

Mush I’m sorry I forgot to mention that you have been bullish on bonds just as long as Lacy Hunt despite bond bull market corrections due to the Fed’s QE 1,2,3 and 4.

Ted R
Ted R

The fact that the 30 year bond has reached this low of a yield shows me prove positive that whoever buys those thongs are desperate and idiots at the same time.


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