PrefBlog

Which way is the wind blowing? It looks like the world’s about to end again:

A selloff in technology shares sent U.S. equity benchmarks lower, with losses accelerating late in the day. Bonds surged on demand for safe havens, pushing the yield on 10-year Treasuries below a key level.

Trade angst weighed on leading tech companies with the Nasdaq 100 Index erasing most of Monday’s gain after a report the Trump administration is considering a crackdown on Chinese investments in technologies the U.S. considers sensitive. Facebook’s woes mounted and Nvidia Corp. spooked investors in chipmakers. The Chicago Board Options Exchange Volatility Index — Wall Street’s fear gauge — spiked.

The equity selling bled into the Treasury market, sending the 10-year yield below 2.8 percent as investors sought havens.
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•The S&P 500 slumped 1.7 percent as of the close of trading in New York.
•The Nasdaq 100 Index fell 3.3 percent, while the Dow Jones Industrial Average slipped 1.4 percent.

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•The yield on 10-year Treasuries declined eight basis points to 2.77 percent.

I hadn’t realized that some US public employee pension funds were so grossly underfunded:

The state hasn’t done a particularly good job running public pensions. According to S&P Global Ratings, New Jersey’s pension funding ratio is the worst in the nation, having saved enough to cover about 31 percent of the benefits that have been promised. The police and fire system is relatively strong by comparison, with about 65 cents for every dollar it’s on the hook for down the road, according to NJ.com.
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States and municipalities from coast to coast are now living with the consequences of the 1990s tech boom, which brought public pension funding levels to 100 percent and allowed politicians to sweeten the pot for union members.

The subsequent bust — and the Great Recession a few years after that — took its toll on the funds backing those promised benefits. The aggregate state and local government pension funding ratio is now 73 percent, up from 67 percent at year-end 2016, according to Patrick Luby of CreditSights, who cites Federal Reserve data.

This entry was posted on Tuesday, March 27th, 2018 at 7:18 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.