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Continued Virus Spread Drops Yields

Markets worldwide were roiled this week by the coronavirus' continued spread and impact on the global economy.  Yields on U.S. Treasuries greater than one year declined by 10 bps or more during the holiday-shortened week, with the U.S. long bond (30-year) dropping to its lowest level ever of 1.89%. 

Those moves were due to an acceleration of the outbreak outside China, with South Korea reporting a surge while new clusters of cases were reported in the Middle East and Italy.  The picture inside China continued to be muddled as the Chinese province at the epicenter of the outbreak restated its official infection count for the third time in a month, casting doubt on the data's accuracy. 

The week's slate of economic data showed further strength in construction, with housing starts and permit issuance up significantly; while purchasing manager surveys weakened in the face of global uncertainty.

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