As part of their toolkit to support the economic recovery during the Covid-19 crisis, central banks could implement yield-curve control. Although appealing, the implementation and exit risks of such a policy counterbalance the benefits, particularly in the Eurozone. Moreover, the impact on financial markets could be significant since chained risk-free assets could temporarily leave risky assets unsettled.
Controlling the yield curve during the recovery phase
State of the US consumer: weakened but resilient
Massive government support and healthy consumer balance sheets are providing the means for the consumer to weather a relatively short but very deep recession. We are closely watching the magnitude and duration of unemployment to gauge the consumer’s debt-repayment capacity. The government backstop continues to provide stability for the financial markets and we believe it is a fertile environment
for active management.
