COVID-19 spreads further, bond yields fall

There was a strong risk-off mood on Friday as COVID-19 infections spread further and the impact it is having on the global economy, with many small businesses in China on the brink of collapse. As NAB’s Rodrigo Catril explains, markets were particularly concerned by the PMI data on Friday that suggested the US service sector has started to contract, although he urges caution, highlighting that  the number is quite a way from the preferred ISM number last month. US government bond yields have fallen, to an all-time low for 30-year yields, as investors switch from equities. The key data event today is the release of the German IFO survey tonight, which will give a clear indication of the impact of the virus on Europe’s leading export economy.

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