Markets are focused on three topics this week: (i) The 4Q 2019 Earnings season, (ii) coronavirus spillover concerns and (iii) Sanders performance in Caucuses. In US Yields the picture is crystal clear on the Long-term chart, for those following the 1.50% support level we are tracking on the daily you will note where the strength in defence comes from in the medium term:
On the technical side the same levels to track:
Support: 1.50% / 1.45% / 1.32%
Resistance : 1.68% / 1.75% / 1.95%
In my books the impact of the virus is going to have a major impact on US GDP growth, tracking for 2% drag on Q1 growth. Chinese spending offshore is expected to drop by 0.6% (which is a conservative estimate). This is weighing on investor decision making as the impact will come through valuation changes rather than the earnings. If you are a believer in the virus having a short lived impact, then you can increase exposure on this dip in cyclicals and value companies. The industries hit hardest are airlines and travel with gaming to a lesser extent receiving a hit via Macao shutdowns.
All the best guys, and as usual thanks so much for keeping your support coming with likes, comments, charts, questions and etc!!