BMA Market Insights: Investors on Alert as Market Volatility Rises


Markets kick off the new year with heightened market volatility after closing out 2019 on a strong note that saw the 10-year U.S. Treasury (UST) yield 1.92% and West Texas Intermediate (WTI) Crude oil range-bound at $61.06bbl. Investors are grappling with the aftermath of a U.S. airstrike that killed Iranian general Qasem Soleimani last Friday, increasing tensions in the Middle East as Iran vows to retaliate. In response, U.S. President Trump threatened Iran with more military force and vowed to slap sanctions on neighboring country Iraq if U.S. troops were expelled from the country. Equity futures are pointing to a loss at the open, the 10-year UST is opening 13.6bps lower from December 31, and WTI is trading higher at $63.585bbl.

On a positive note, a delegation from China is scheduled to travel to the U.S. next Monday, January 13th to sign phase one of the U.S.-China trade deal on January 15th. 

U.S.-China Trade War

  • China plans to cut tariffs on Pork, Technology, and other items from a list worth nearly $389 billion beginning January 1, 2020. 
  • Phase-one of the U.S.-China trade deal is now verbally complete and undergoing technical and legal review to be signed on January 15, 2020.
  • For a more elaborate list of items being negotiated, follow the link to the previous article:

U.S.-Iran Confrontation – A timeline of recent events

  • Friday, December 27 – More than 30 rockets were launched at an Iraqi military base that resulted in four Americans wounded and one American contractor killed.
  • Sunday, December 29 – U.S. airstrikes killed 24 members of an Iranian-backed militia at Iraqi and Syrian bases.
  • Tuesday, December 31 – Pro-Iranian militia members marched on the U.S. Embassy imprisoning American diplomats and burning the reception area.
  • Friday, January 3 – U.S. drone strike killed a senior Iranian commander, Major. General Qassim Sulemani.
  • Monday, January 6 – Iran pledges to restart uranium enrichment and U.S. President Trump doubles down on threat to attack Iran’s cultural sites.

Key events coming up this week:

  • Fed speak from officials Richard Clarida, John Williams, James Bullard, and Charles Evans on Thursday.
  • The U.S. jobs report is due on Friday.