Economic Information – July 29, 2020
As time has passed, we’ve been getting more and more information on how the economy is performing since the virus has spread across the world. There is no question that the global economy has contracted significantly during this time period.
However, the absolute collapse of the markets has been buoyed by the world’s Central Bankers. Almost every asset and form of liquidity has been backstopped by the Fed and its global counterparts. These moves to shore up the functioning of the Capital Markets has had an incredible impact on the confidence of the markets.
This confidence has been inspired by the Fed’s seeming unwillingness to allow almost any asset class to depreciate in price. They’ve backstopped overnight money markets, municipal bonds, corporate bonds, international trade markets, to name a few of those asset classes. We’ve even had a former Fed Chair suggest they should buy stocks.
Add all that up and it seems pretty evident why asset prices across the globe have appreciated so much from the market’s bottom in late March.
It is likely that the elections will come into focus now, so we might see more downside volatility as election approaches. Nevertheless we feel the Central Bankers around the world will continue to support the markets, regardless of who is President.