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Market Volatility Remains Elevated

March 11, 2020

 

Overview: Over the past week, the coronavirus again was the source of nearly all market movement. Daily volatility remained extremely elevated, and mortgage rates ended a little above last week’s record-low levels.

The degree of uncertainty about the spread of the coronavirus still has not eased, making it very difficult to forecast how much it will slow global economic activity. As a result, the daily movements in stock and bond markets continue to be extraordinary by historical standards. Overall, mortgage rates have declined substantially since the outbreak of the disease.

 

The latest economic data covering the period prior to the spread of the coronavirus continued to show that the U.S. economy was performing very well. The economy gained a massive 273,000 jobs in February, far above the consensus forecast of 175,000, and revisions added another 85,000 jobs to the results for prior months. The unemployment rate unexpectedly declined from 3.6% to 3.5%. Average hourly earnings, an indicator of wage growth, were 3% higher than a year ago. The big question is how much the coronavirus will affect future economic activity.

 

Monthly Job Gains (thousands)

 
Week Ahead 

March 12 — European Central Bank meeting

March 17 — Retail Sales report

March 18 — New Residential Construction report (Housing Starts)

March 18 — U.S. Federal Reserve meeting

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