Morning Commentary: A Bit of a Breather

Foreign Exchange - Morning Commentary
A Bit of a Breather
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David Atkinson
David Atkinson
Foreign Exchange Sales Manager
Markets came back from the brink this morning, with equities indicating a modest recovery from yesterday's record sell-off.  Bond yields have followed suit with the 10-year safely back from those 0.31% all-time lows yesterday, oil prices seem to have stabilized, and the safe-haven currencies like the Japanese yen have given back some of their gains from yesterday.  The euro is trading in the 1.13s after having spent most of yesterday a cent higher.

Part of the recovery is no doubt just pure overshoot, but news that the administration was preparing a fairly comprehensive package of economic stimulus measures no doubt contributed to the rally.  Details will be forthcoming today, and yes, the markets will put some sort of judgment on what it hears coming out of Washington.  There are also some significant Democratic primaries today, which will be on interest to markets but certainly less so than COVID-19 and related response news.

In a way, today is like some mid-stream section when analyzing markets.  There is not much data, which would be ignored anyway.  Market participants are wondering what is happening behind the scenes.  Will the Saudis and Russians find a way to work together on oil prices?  Will Democrats and Republicans really be able to get an economic rescue package ready?  As to COVID-19, many countries seem to have realized their situations too late and are turning to delay strategies rather than containment strategies.

As always with a virus, there will be a peak time of infections and an understanding of where the world is with this.  Asia has already gone through that for the most part and Europe and Iran are in the middle of the bump higher.  The U.S. will have something coming as well.  This will be a story until we can all get to warmer weather and reassess where we are then.
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