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U.S. stock markets were mostly unchanged through Thursday last week despite building concerns surrounding the coronavirus, more negative news regarding Boeing and the 737 MAX. 10-year U.S Treasury rates, in contrast, fell 9bps through Thursday moving lower as investor concerns over the coronavirus increased. On Friday, U.S. stock markets capitulated to coronavirus concerns after a second case was reported in the U.S., with the S&P 500 Index decreasing just under 1% and with the 10-year U.S Treasury rate falling another 5bps. At week’s end the S&P 500 lost a little over 1% closing at 3295.45, 10-year U.S Treasury rate dropped 14bps to 1.68% and the U.S. dollar strengthened 0.3% (as measured by the DXY Index).

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Stronger-than-expected U.S. economic reports (retail sales, housing starts and jobless claims), moderate inflation and good earning releases drove the S&P 500 to another record high. In addition the official signing of the U.S.-China Phase One trade agreement and the removal of the designation of China as a currency manipulator along with a stronger-than-expected Chinese industrial production report, helped move U.S and global stock markets higher while strengthening the U.S. dollar. At week’s end the S&P 500 Index increased 1.6% to 3329.62, the 10-year U.S. Treasury rate was unchanged at 1.82% and the U.S. dollar (as measured by the DXY index) strengthened 0.3%.

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Though markets started the week with heightened concerns regarding possible Iran retailiatory actions against a U.S. airstrike killing IRGC general Soleimani, U.S. stock markets, 10-year U.S. Treasury rates and the U.S. dollar moved slightly higher through Tuesday. Overnight reports on Tuesday of Iranian missile attacks on U.S. bases in Iraq drove U.S. and global stock markets significantly lower before U.S. stock markets opened on Wednesday. President Trump’s speech before the nation late Wednesday morning defused tensions surrounding the U.S. and Iran and U.S. stock markets moved higher yet again through Thursday. Friday’s good-but-slightly-weaker-than-expected payroll report pushed U.S. stock markets off their highs and pushed the 10-year Treasury rate and the U.S. dollar slightly lower as well. At week’s end the S&P 500 Index increased 1.2% to 3265.35, the 10-year U.S. Treasury rate increased 3bp to 1.82% and the U.S. dollar (as measured by the DXY index) strengthened 0.5%.

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Though finishing slightly lower than its all time high reached on Friday the previous week, the S&P 500 Index ended the year up just shy of 29% while the 10-year U.S. Treasury rate closed at 1.92%, down approximately 80bps from its level at the end of 2018. The U.S. dollar (as measured by the DXY index) finished the year almost unchanged. Last week opened with reports of U.S. attacks on pro-Iranian military bases in Syria and Iraq and closed with news of a U.S. airstrike killing IRGC general Qassam Soleimani. Stock and bond markets barely reacted to the former news with markets experiencing very light trading activity Monday and Tuesday. On Thursday, the first trading day of the new year, the S&P 500 moved higher by almost 1% and U.S. 10-year Treasury rates fell about 4bps after the PBOC said it would further loosen monetary policy to support the Chinese economy. However, overnight news leading into Friday of the killing of Soleimani and weaker-than-expected ISM manufacturing index number the S&P 500 Index reversed almost all of Thursday’s gain and pushed the 10-year U.S. Treasury rate a few basis points lower. At week’s end, the S&P 500 Index was down 0.2% at 3234.85, the 10-year U.S. Treasury rates was down 9bps to 1.79% and the U.S. dollar was almost unchanged.

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Quiet holiday-shortened week with the S&P 500 Index struggling but eking out new highs, 10-year U.S. Treasury rates slightly declining and the U.S. dollar weakening. Weaker-than-expected durable goods orders and new home sales reported on Monday (the only significant economic data released last week) may have set the tone for the remainder of the week. At week’s end the S&P 500 Index increased 0.6% to 3240.02, the 10-year U.S. Treasury rate fell 4 bps to 1.88% and the U.S. dollar weakened 0.8%.

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Stronger-than-expected Chinese factory production and consumer spending numbers combined with support from last week’s announcement of a U.S.-China phase one trade agreement and congress passing the USMCA pushed the S&P 500 Index to another record high and moved 10-year U.S. Treasury interest rates 5bps higher to 1.88% through Tuesday. Stronger-than-expected U.S. economic reports, including strong factory production and new housing starts, pushed 10-year U.S. interest rates 3bps higher to 1.92% and kept the S&P 500 Index at near record levels through Wednesday. Stronger-than-expected new homes sales on Thursday and consumer spending reports on Friday along with Trump administration statements the U.S.-China phase one trade agreement would be signed next month, pushed the S&P 500 index to new highs with 10-year U.S. Treasury rates remaining at 1.92%. At week’s end the S&P 500 Index increased 1.7% to 3,221.22, 10-year U.S. interest rates fell 10bp to 1.92% and the U.S. dollar (as measured by the DXY index) strengthened 0.5%.

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