Liquidity and guarantees for markets in panic mode

Summary

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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