Surprise? China Undercounts Afflictions and Fatalities, Curbs Risk Taking

Feb 13 21:02 2020 Print This Article

Overview: There is one overriding driver today, and that is the incorporation of CAT scan diagnoses of the virus in Hubei, ground-zero. This follows the arrival of WHO officials into China a couple days ago. Not only have the cases jumped, but so did the number of deaths. It plays on fears that China's figures are not reliable. But it is not just China. Indonesia is reporting no cases, for example, which seems to many observers as incredulous. Investors have responded by taking a little risk off the table. The Shanghai Composite's seven-day rally came to an end, and most equity markets in the region fell. Australia and Taiwan were exceptions. Europe's Dow Jones Stoxx 600 is ending its three-day advance. It is off by about 0.5% in late morning turnover. US shares are trading lower, and the S&P 500 is poised to give back yesterday's nearly 0.65% gain. Bonds are picking up the safe-haven bid, and yields are 2-5 bp lower, and the US 10-year Treasury yield is back below 1.60%. The dollar is back at the fulcrum, with the dollar bloc and Scandis under pressure, while the other currencies are steady to higher led by the Japanese yen and Swiss franc. The floating, freely accessible emerging market currencies are mostly lower, though the Hungarian forint is a notable exception. Stronger than expected inflation (4.7% vs. 4.0% CPI) has helped the forint stabilize after falling to record lows against the euro yesterday. Gold is about $10 higher, recovering most of the losses seen in recent days. March WTI, which had approached $52 on follow-through buying after the gains in the US yesterday, has reversed and is back below $51.  

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About Article Author

Marc to Market

Marc Chandler has been covering the global capital markets in one fashion or another for more than 25 years, working at economic consulting firms and global investment banks. Chandler attended North Central College for undergraduate work, where he majored in political science and the humanities. He holds master's degrees from Northern Illinois University and University of Pittsburgh in American History and International Political Economy. Currently Chandler teaches at New York University Center for Global Affairs, where he is an associate professor. A prolific writer and speaker he appears regularly in the press and has spoken for, and is an honorary fellow of, the Foreign Policy Association. In addition to being quoted in the financial press daily, Chandler has been published in the Financial Times, Foreign Affairs, and the Washington Post. In 2009, Chandler was named a Business Visionary by Forbes. In 2009, his book, Making Sense of the Dollar, was published by Bloomberg Press and received a Bronze Award from Independent Publishers.

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