Week in Review 3/20/2020

Global equity markets suffered significant losses as concerns about the economic impact of the rapidly spreading corona virus intensified. Efforts by governments and global central banks to blunt the financial impacts of the virus have thus far failed to assuage worried investors. In the US, the S&P 500 ended the week at its lowest level in three years. Treasury yields rose briefly mid-week as investors bought back into stocks, but the optimism was short-lived as the 10-Year yield dipped below 1% again on Friday. Municipal bonds had their biggest retreat since 1987 as recession fears led to a record exodus from municipal bond mutual funds.
As of Sunday, the World Health Organization (WHO) had reported 316,000 cases of coronavirus globally and over 14,000 deaths. Italy continues to be heavily impacted with its death total surpassing that of China. New York and California imposed “shelter-in-place” measures, effectively shutting down entire cities and restricting non-essential travel. The US and Canada closed their border, the longest international border in the world, on Friday in an effort to slow the spread of the virus. Trade, however, was exempted from the closure.
Central Banks around the world unveiled massive aid packages to support the global economy. The European Central Bank announced a €750B debt-buying initiative while New Zealand launched a spending package equivalent to 4% of its GDP. Oil had yet another volatile week as Russia and Saudi Arabia showed no signs of backing down from their current price war and demand destruction stemming from the corona virus became more apparent.