Economist's Insights

ICYMI – February 9, 2018, Weekly Market Recap

Feb 12, 2018

The rapid reemergence of volatility in global financial markets – an event rarely seen during 2017 – dominated headlines and upstaged a couple of solid economic reports (i.e. cycle-high ISM nonmanufacturing PMI and the 2nd lowest level of new jobless claims since 1973) and an hours-long government shutdown that ended with a two-year $300B budget deal. The swings started early with the Dow dropping 1,597 points intraday Monday before recovering to close down 1,175 (-4.6%). That sparked a worldwide sell-off that helped pushed the VIX equity index to its second highest level since the financial crisis. The volatility lasted throughout the week as big gains gave way to big losses that gave way to big gains; on an intraday percentage swing basis, the Dow experienced its second most volatile week since the financial crisis. Ultimately, the Dow dropped 5.2% in its worst week since January 2016. The S&P 500 briefly broke below its 200-day moving average. Rates were equally as volatile early in the week, but the curve settled in later to close little different than where it started. The 2-year yield fell 7 bps while the 10-year yield added just over 1 bp, leaving the curve the steepest between those two points since October. Click here to see the full recap.