Market Quick Take - March 12, 2020 Market Quick Take - March 12, 2020 Market Quick Take - March 12, 2020

Market Quick Take - March 12, 2020

Macro 3 minutes to read
Steen Jakobsen

Chief Investment Officer

Summary:  Markets are reeling after a very poor performance in a President Trump address on the coronavirus outbreak. As well, we note a massive sell-off in US investment grade corporate bonds in recent sessions as a significant escalation of the weak risk sentiment plaguing markets. Meanwhile, the ECB meeting today is crucial for EU Banks.

What is going on?

Trump addressed the US overnight in a speech many saw as poorly organized. It inspired unease as he discussed the “foreign virus”  and announced a travel ban for most of travel from Europe as well as a handful of other measures.

Our take on Trump: US President Trump clearly delivered a speech he was not interested in delivering. His tone lacked all energy and conviction. From the recent mismatch of his signaling on the danger of the Covid19 outbreak relative to what public health officials have been saying, and given the massive disruptions to the US economy that are incoming and the bear market in stocks, it may be dawning even on Donald J. Trump that his presidency is drawing to a close.

Worst case: If markets can’t right themselves soon, US authorities could step in to declare a market holiday – not a prediction, but a risk, with Covid19 as an excuse.

Awareness level of the severity of Covid19 outbreak dawns on US at a popular level. This after the professional basketball season has been suspended and Hollywood star Tom Hanks announced he and his wife have the disease.

Denmark joined Italy in a more or less total shutdown of public institutions in coming days, with Italy ratcheting up stimulus while closing all commercial stores apart from supermarkets and pharmacies.

As President Trump addressed the nation, US equity futures plunged into bear market territory, with the S&P futures down over 5% at one point overnight, making this the worst market drawdown since the financial crisis.

Stocks and bonds both down: – yesterday saw an unusual day in which both stocks and longer term treasuries performed poorly, with many blaming

Japan’s Nikkei down over 850 points, or over 4% as of this writing.

Investment grade bonds fell 3.3% in US session compared to high yield bonds down only 2.2% in what looks to be a liquidity preference dynamic. This means high yield bonds true value is much lower from current levels.

Risk parity funds had their worst decline in terms of speed since 2008 which could add to deleveraging dynamics.

Commodities suffer further losses with HG Copper breaking key support. Crude oil trades lower as Russia, Saudi Arabia and the UAE raise production while demand continues to slow. With bonds and stocks both suffering losses gold is struggling as a new round of margin calls and deleveraging hits the market.

What we are watching next?

Very volatile session likely today as the EU opens up amidst ugly market drawdowns overnight, while pondering the scale of the ECB’s likely very significant response to the Covid19 outbreak in today’s ECB meeting

Treasuries firmed overnight as US equity futures declined.

What is our trading focus?

Volatile trading day ahead as markets mull whether ECB’s Lagarde is bringing enough to the table to get ahead of the Covid19 crisis, especially for SME’s and banks.

With oil under further pressure we are also watching energy companies where we will soon find out who will be losing in the oil price war between Russia and Saudi Arabia.

Calendar (times GMT)

1230 – US Weekly Initial Jobless Claims (any pickup from Covid19 important)

1245 – ECB Meeting

1330 – ECB Lagarde presser


The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this site may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and services offered on this website are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc. Android is a trademark of Google Inc.