It seems the world is starting to get used to life with the Coronavirus. Markets are still pretty jumpy but are reacting more to policy announcements than infection statistics, suggesting our current environment is now priced in and investors are now looking for reasons to think things might get better.
To that point we think it is still too early to start hoping for the best, but it is probably time we stopped fearing the worst.
Looking ahead we expect a big increase in the number of cases and fatalities across Europe and the US but see that just as the inevitable progression of the virus rather than a deterioration. Markets might take the news badly, but they should be expecting it.
The big variable now is whether the USA can get its act together. While the Federal Reserve has stepped in to stabilise financial markets, the government has yet to pass a stimulus package. While the Democrats produced a bill in the House that was extremely far reaching with many social programs expanded permanently, which was never going to get bipartisan support, the Republican bill passed in the Senate was cynical and too easily abused. Naturally both sides shot down the respective bills.
Now both sides have got that out of their system hopefully they can reach a compromise quickly and finally react properly to the unfolding economic crisis.