(Apr 9:) Markets remained orderly until late February; movements were consistent with an economic challenge contained to Asia. Safe-haven markets had rallied (the yield on 10-year US Treasuries tightened to 1.46% on Feb 21, from 1.88% at the start of the year) while riskier assets, such as emerging market equities, had dropped.

However, the outlook had changed markedly by early March. By then, Covid-19 had spread far more widely than many observers had anticipated. It became apparent that unprecedented public health measures, with significant economic implications, were going to be required, leading investors to start repricing assets. March saw risk assets sell-off in a dramatic fashion (with the decline from market peaks even more even more aggressive than during the 2008–2009 global financial crisis, as shown in Figure 1).

Market pricing now implies a high degree of confidence that recession-like conditions will result across most major economies, but uncertainty remains over their depth and duration. Restrictions in Europe and the US are likely to persist for months and will have a major short-term impact on consumer spending and company profits, as well as potential second-order effects from lower incomes.

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