ABX Weekly 18/03/2020

Market Update  

 

What a week! We have seen strong response from Central Bankers globally with some sort of QE programs back in place. The US Fed has in an emergency meeting cut rates by 1% down to almost zero and injecting massive of amount of money into the market to make sure the system keeps on functioning. There was also some talk last night that President Trump will soon announce a massive $1Trillion stimulus package which could include relief in form of direct payments and tax breaks. US Treasury Secretary Steve Muchin said that the administration wants to mail out checks soon. 

Stock markets around the world had some sort of relief rally and time will only tell if they have found a bottom yet. Is it still a falling knife or have we reach already some sort of bottom? Nobody knows at this stage.  

In the Government bond markets we have seen bond yields going the opposite way and the yield curve has steepened again over the past week. Our 10y Government bond currently trades once again over 1% with a low just recently of 0.55%. The current talk in the market is that everyone is expecting our RBA to announce some sort of QE program very shortly and they have already injected massive amount of liquidity into the banking system. 

Clearly between the Central Bankers and massive fiscal stimulus the wall of cash should help to absorb some of the shock caused by the pandemic of the Corona virus.