Fears of Second Wave Roil Markets

With new cases rising in over 20 states and Beijing on lock-down, fears of a resurgence in COVID-19 infections have sparked a sharp sell-off in worldwide equities and a corresponding rally in the Treasury market.

With the DJIA poised to open as much as 500 points lower than Friday’s close, a rally in bond prices has pushed the Ten-Year’s yield down to around 65 basis points with the Two-Year pretty steady at around 17 basis points. Crude oil is off by a dollar or so to just over $35/barrel while gold is down by almost $20 to $1,711.

In other news this morning, the New York Fed reported a pleasant surprise for its Empire Manufacturing Index. While May’s reading of minus 48.5 was expected to improve to minus 29.6, it instead came in at a seemingly lofty minus 0.2. Tomorrow’s big news will be a fresh report on Retail Sales for May. That activity is expected to show an 8% boost for last month.