March 30, 2020
- Equities gap lower but stabilize
- Dollar bid once again
- Nikkei -1.57% Dax -0.17%
- UST 10Y 0.63%
- Oil $20/bbl
- Gold $1620/oz
- BTC/USD $6285
Asia and EU
- GBP UK Mortgage Approvals 73.5K vs 68.2K
North America Open
- USD Pending Home Sales 10:00
President Trump relented on his timeline of returning to “normal” by Easter and suggested that the U.S. should continue its social distancing policies until at least April 30.
In his typical rambling presser that lasted more than an hour yesterday, President Trump updated the country on all the measures being taken to combat the coronavirus, but perhaps the single most important aspect of the press conference was the radical change in tone from the President who appeared to finally take the crisis seriously even conceding that under the of circumstances COVID may end up causing 100K deaths before it recedes.
Although the news on the infection front was grim with the U.S. closing in on 150K cases and more than 2500 deaths, the very fact that the President was starting to listen to scientists seemed to soothe the markets which gapped lower on the open but stabilized as the night wore on. Investors seemed pacified by the fact that with scientists in control of policy the COVID-19 quarantine could have a clear definable timeline and effective plan of eradication rather than be subject to rolling waves of infection that could paralyze the U.S. economy for months.
Still, so much damage has been done by the virus that whole sectors of the U.S. economy from airlines to hospitality to energy are teetering on the brink of bankruptcy and the next month is sure to bring grimmer news as markets begin to see the full extent of the financial damage. Therefore it’s difficult to imagine that any rally in risk can sustain itself unless we see a dramatic decline in new case growth which would suggest that the “shelter at home” policy is working.
For now, the markets are likely to settle into an uneasy churn this week with volatility receding from its recent highs as traders look to see just deep is the damage.