ick just about any market — stocks, bonds, oil — and it’s sending a signal that investors around the world think there’s a high probability of a recession.
J.P. Morgan sent around a note to clients late last week saying markets were indicating a 90 percent chance of a recession, a term that generally means six straight months of economic contraction. The picture looks worse now, especially in the bond market. Last week, Wall Street panicked when the yield on a marquee government bond — the U.S. 10-year Treasury — fell below 1 percent. That had never happened before. Now that yield is below 0.5 percent, a jaw-dropping situation that didn’t even occur during the Great Recession.
Live updates on the U.S. markets as coronavirus spreads
What the heck is going on? The world economy essentially just got a one-two punch to the face. The coronavirus is a serious health crisis that’s morphing into an economic crisis as people stay home, cancel trips and stop spending on about everything except hand sanitizer and toilet paper. On top of that, Saudi Arabia basically launched an oil price war on Sunday. The world has a glut of oil right now and the Saudis decided not to scale back production after Russia flooded the market with extra oil. So oil prices plunged 30 percent Sunday, the largest one-time drop since the 1991 Gulf War. Oil is now trading around $30 a barrel, a price most energy companies outside Saudi Arabia can’t survive on, including many in the United States.
