Pandemic Induced Market Moves
The pandemic spread accelerated in March. The VIX is the best gauge of investor sentiments. While some nervousness appeared in the market on Feb 21st and Feb 27th, the early march covid-19 cases shows a pandemic and the market hit crisis mode on March 9th 2020.
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March 6th: the The initial markets moves were relatively predictable: - stock markets down - rates lower - gold price up, jpy value higher - muted effect on credit
March 9th: as VIX increased, the market started to reach a crisis level of ebullience, and improbable events started to happen. The long term treasury and Gold were liquidated to raise cash:
Following this, the shallower debt markets seized and volume evaporated as the few things that traded were heavily discounted.
March 18th: the ECB announced 750bn of bond purchase. Given her previous statements last year, Ms Lagarde wanted to print a trillion or two for a green new deal. The pandemic will give her a different cause to support her means.
March 25th: US senate and White House announce agreement on a 2tn aid package.
March 26th: UK Chancellor of the exchequer announces a relief package for self-employed.