News and speculation related to the spread of the coronavirus shook markets worldwide this week. While the latest data indicated that the number of new infections in China is declining, the global spread of the virus increased the projected economic impact, magnifying the impact on the world's financial markets.
On the domestic front, equities declined by over 12%, a dramatic decline of a scale not seen since 2008-9. Bond markets were similarly impacted as the two-year Treasury note's yield declined by 44 bps (or 32%) to 0.92%, marking one of the largest relative weekly declines in 40 years. Market participants also moved to price in easing from the Fed at their next meeting in March, as the economy is perceived to need whatever support the Fed can muster. The week's economic indicators were largely ignored as the market remained focus on the coronavirus' potential impact.