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The stock market selloff has drawn the most attention this week, but moves in the U.S. government debt market will likely have much more important impacts on the economy.
Why it matters: The yield on the 10-year U.S. Treasury note, which hit a new record low on Wednesday, is tied to the rates on mortgages, student loans and more. As it declines, credit gets cheaper and more attractive to both individuals and businesses.
What to watch: The interest rate for federal student loans are recalibrated once a year to take into account changes in the government's borrowing costs.
By the numbers:
That would likely encourage more students to take on loans, adding to the inflated level of outstanding U.S. student debt, currently totaling $1.6 trillion.
Watch this space: Businesses, especially U.S. banks, have been taking advantage of low interest rates and easy money from the Fed for years, but that has masked a decline in net interest margins, S&P Global warned on Monday.
Bank of Korea kept interest rates unchanged at 1.25%, against expectations of a rate cut to offset coronavirus fears. Policymakers were worried about the weakening won currency and worsening the housing price bubble. There were two dissents. (Reuters)
Hedge funds ramped up risk appetite this month with net leverage rising by about 5%, one of the fastest expansions in years. (Bloomberg)
Google and Microsoft are moving some production, including the Pixel smartphone, out of China and into Vietnam and Thailand because of the coronavirus outbreak. (Nikkei)
Axios' Jennifer Kingson writes: Wall Street is still grappling with what to make of the drumbeat of coronavirus warnings. S&P 500 futures were poised to drop again Thursday after reports of "community spread" to a person in California who had not traveled to China or had close contact with a person known to be infected.
Driving the news on Wednesday:
Between the lines: CME Group's Fedwatch Tool gauged the probability of a rate cut at the Fed's March 18 meeting at 36.5%, and traders now see a 78% likelihood of a cut in April and a 58% chance the Fed cuts rates at least three times this year.
Plus, large investment banks have begun revising their estimates of coronavirus damage.
What they're saying: "When you consider the scale of the epidemic at this point, it’s hard to believe that we aren’t going to start running into major supply chain interruptions and also start seeing more pressure on earnings and free cash flow for corporations," Scott Minerd, global CIO of Guggenheim Partners, told CNBC Wednesday.
CEO pay is growing at breakneck speeds even for top executives who aren't doing a very good job. In response to this trend of overvalued execs, social responsibility nonprofit As You Sow released its latest report on the most overpaid CEOs of S&P 500 companies.
What it means: The list is a calculation based on the chief executive's pay package, total shareholder return of the company during the previous year, and the pay relative to their company's average worker.
The big picture: CEO pay has increased so greatly that even the bottom 10% of companies with the worst one-year shareholder returns had CEOs with median pay packages of $12.6 million, As You Sow found.
The ideal grocery delivery customer is young and rich, new data from CivicScience shows.
Why it matters: Companies like Amazon and Walmart are investing further in grocery delivery and the data show who their target demographic could be.
Details: The increase in the number of people 18–24 who use and like grocery delivery is a shift from last year, when enthusiasm about the services was split among age groups, CivicScience analysts note. While the youngest adults lead the way in adopting this tool, those aged 35-54 lead with intent to use.
The intrigue: Respondents who have used and like grocery store delivery also report favoring specialty stores such as Whole Foods and Trader Joe’s. However, the greatest interest comes from those who shop at stores known for lower prices, like Sam’s Club and Walmart.
Ernest Everett Just was a pioneering biologist who is best remembered for his recognition of the fundamental role of the cell surface in the development of organisms.
However, racism kept him from earning a tenured position at a major American university and in 1929 he moved to Europe where he published his most famous work, "The Biology of the Cell Surface," which argued that all life derives from a complex organic structure.