Collapse Of Oil Prices And Bond Yields

Date: Tues, 10 March 2020

Author: Matthew J. Belvedere



 Last Monday, CNBC’s Jim Cramer reported that a catastrophe in oil prices and bond yields brought the stock market in “uncharted waters” as Dow futures pin pointed at a 1,300-point fall at Wall Street.

After the OPEC’s production cut deal failed, all crude futures took a plunge since Sunday night. The 10-year Treasury yield generated appalling new lows in a global flight to the perceived safety of bonds. Cramer posted on Twitter quoting that such patterns are “signalling an imminent recession.”


Adding on, early on Monday, the 10-year Treasury yield that usually moves inversely to price, dropped to a new record low of 0.318% before it recovered some losses. Oil prices were off about 20%, though they had been 30% lower overnight.


“before it could recover some losses” indicates that it did not manage to recover

Cramer took a step further tweeting in the wee hours of Monday morning that the moves in oil and yields along with the existing widespread market concerning the spread of the coronavirus, “are both unprecedented and exceed the chaos of 2007-2009 today.”


While he emphasised on the “speed” of computerized stock futures trading in thin early morning volume, CNBC’s “Mad Money” host was startled. “That you could have such a monumental move in six hours is truly astounding,” he tweeted. “The average oil stock could be down 25% at the opening. The average S&P stock could be down 10%. Gold remains the only bull market besides utilities, drugs,” he added.


These mighty fluctuations ended off on last Friday with the Dow Jones industrial average speedily cutting back weightier losses in the final 10 minutes of the session concluding at 256 points. Surprisingly, the Dow managed a marginal weekly gain.


Nonetheless, that fragment of optimism was not evident on Monday morning, in a global stock market rout with about 5% drops observed in Asia, Europe and U.S. futures. The Dow, S&P and Nasdaq futures hit “limit down” 5% on Monday, implying they will not be able to trade lower than 1,255 points on Dow futures, lower than 145 points on S&P futures and lower than 410 points on Nasdaq futures.


Shortly after Monday’s open on Wall Street, the shares went down over 7%. The dive triggered the first of Trading and caused a pause for approximately 15 minutes. When trading recommenced, the S&P 500 experienced a decline for about 6%.


Keyword :, Sterling House Trust, SHT