Weekly Economic Update: February 3rd, 2020
• Treasury yields finished the week significantly lower falling sharply on Friday as concern over the Wuhan coronavirus’ potential to disrupt global supply chains continues to mount. Yield on the two-year note finished the week down 17 basis points while the five-year note ended the week 19 basis points lower.
• The bond rally that took place Friday brought back fears of recession as the ten-year Treasury note once again inverted with the three-month bill.
• The first look at Q4 2019 GDP growth came in Thursday at 2.1% and was driven largely by an 8.7% contraction in imports. The private sector is notably struggling as final sales to private domestic purchasers increased by its slowest pace since 2015 at 1.4%.
• With inflation now habitually falling short of the Fed’s target, markets and economists alike believe the next fed funds move will be a cut rather than a hike and will occur sometime in mid to late 2020.