the articles & research center news
Where we stand in the crisis and what to watch: Investors have moved from underestimating the severity of the crisis (buoyant markets) to a full global escalation (with the US joining emergency measures) that has led to market disruption and over-reaction.
Pascal BLANQUE, Vincent MORTIER, Monica DEFEND
Christine TODD, Marco PIRONDINI, Paresh UPADHYAYA
Monica DEFEND, Valentine AINOUZ, Didier BOROWSKI
At the time we are writing major losses are occurring in risk assets, with equity indexes in Europe opening down today to around -6 to -8% and volatility spiking (VIX index above 40, a rare episode). Demand for safe haven assets has surged to record levels with the US Treasury Yield dropping down to a new record level below 0.4% and gold touching a 7 year high above $ 1,700. The recent reaction reflect fears of increasing spreading of the coronavirus at European and global levels and the increased uncertainty on the economic outlook, with the news on falling oil prices adding to this uncertainty.
Pascal BLANQUE, Vincent MORTIER
Amundi Research & Investment Insights Unit
In the first intra-meeting ease since the 2008 crisis, the Fed delivered a 50 basis-point rate cut. Market volatility and liquidity concerns have likely been the trigger for the emergency cut. The market reaction has been a sell-off in equities, while the 10-year Treasury yield touched new lows, as the Fed move is perceived as not being enough to offset recent deterioration in financial conditions due to the market reaction to the coronavirus outbreak. Markets still expect more.
Christine TODD, Paresh UPADHYAYA, Monica DEFEND