Published on Monday, March 23, 2020 | Updated on Monday, March 23, 2020

Liquidity and guarantees for markets in panic mode

The rapid outbreak of the new coronavirus (COVID-19), which has spread far beyond China, has wreaked havoc on financial markets. World stock markets have fallen by around 30% in just over a month, led by the transport, tourism, hotel industry and energy sectors, which has been followed by others such as finance.

Key points

  • Key points:
  • Recently, we have noticed that investors can't even find solace in fixed income, which is under enormous pressure following the announcement of the fiscal stimulus and due to the demand for liquidity.
  • Risk premiums have also increased for both the corporate and sovereign markets.
  • The price of oil, a good indicator of the health of the economic cycle, has reached all-time lows in the past two decades.
  • Economic and monetary measures to contain the outbreak are starting to restore confidence, but virus must be contained in the first place.

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