Weak performance for stocks, globally, persisted last week, spiced by oil testing new lows. The S&P 500 (SPY) lost a total of 2.2% during the week. On the intraday of Friday’s session, it dipped to as low as 1858 points, slicing below August’s low, though later recovering to 1880.29. Losses in the Nasdaq (QQQ) were even greater, with the technology index losing no less than 3.3% on the week. The red territory was also evident in Europe, with the DAX losing some 3.1% during the week, as well as China, seeing the Hang Seng scalp 4.6% from its value. Oil prices also exhibited persistence with their freefall, in expectation for the return of Iran as a supplier of the black gold. Oil dipped below USD 30 a barrel on Tuesday, marking the first time it has done so since 2003, ending the week at USD 29.42 per barrel.

Weakness in the markets further translated to dis-belief that the Fed will keep to the path it set and raise interest rates for four additional times in 2016. The probability, derived from the bond market, for another hike in March, dipped to below 30%, which is the first time this happened since December’s hike. President of the Fed’s bank of New York, William Dudley, further aided to tame the U.S. yield curve, on Friday, speaking in New Jersey. Among other things, Dudley stressed that he expects normalization of monetary policy to be gradual, and that some recent economic activity indicators “have been on the softer side.” Furthermore, on the Q&A after his speech, Dudley said he would not rule out considering negative rates in the U.S., in the case that the U.S. economy would weaken.

Troubling U.S. signs and the flight to safety

It’s not clear of Dudley already accounted for this, but the U.S. economy has been showing some troubling signs. This is more disturbing given its size and the fact that not too many large economies have been advancing as steadily as the U.S. Friday saw December’s Advance Retail Sales contract by 0.1% Month over Month. The Empire Manufacturing Survey was released at a level of -19.37 points, no more, which is its lowest since 2009. Industrial Production, similarly, was reported to have shrank 0.4% in December, and November’s print was revised downwards to indicate a substantial 0.9% contraction.