Stocks rallied on reports the coronavirus outbreak was slowing in numerous global hot spots, including New York, Italy and Spain. U.S. stocks led international, with small cap showing particular strength over large cap. Treasuries were slightly down, but corporate bonds joined the rally, jumping even further Thursday following the Federal Reserve’s stimulus announcement. Gold was also up for the week.

Weekly Returns

S&P 500: 2,790 (+12.2%)
FTSE All-World ex-US (VEU): (+8.3%)
US 10 Year Treasury Yield: 0.73% (+0.11%)
Gold: $1,681 (+3.9%)
EUR/USD: $1.093 (+1.1%)

Major Events

• Monday – Stocks rallied after data from New York showed a potential plateau in new deaths from coronavirus.
• Monday – The Fed said it will create a facility to help finance loans made through the emergency small business lending program.
• Tuesday – British Prime Minister Boris Johnson was moved to intensive care with coronavirus complications.
• Tuesday – Spain and Italy showed signs their respective outbreaks were slowing.
• Wednesday – Italy, Austria and Denmark began planning how to restart their economies and ease lockdown requirements.
• Wednesday – Bernie Sanders officially ended his campaign for the democratic presidential nominee.
• Thursday – The Fed announced steps to provide as much as $2.3 trillion in aid, including a pledge to buy recently downgraded corporate bonds, CLOs and commercial mortgage backed securities, starting programs to help small and midsize businesses, and aid to local governments.
• Thursday – Another 6.6 million Americans filed for unemployment, bringing the total to almost 17 million over the last three weeks. This implies an unemployment rate of almost 15%.
• Thursday – Dr. Anthony Fauci, director of the U.S. National Institute of Allergy and Infectious Diseases, stated the death toll from coronavirus would be much less than originally anticipated due to successful social distancing measures.
• Friday – Good Friday.

Our Take

The coronavirus pandemic is far from over, and conditions are still likely to get worse before they get better. But the last week offered a few glimmers of hope in the world’s battle against the deadly disease. The most promising came from New York where the number of new deaths appeared to plateau over a several day period. New York has been the epicenter of the U.S. outbreak, being hit materially harder than any other state. Its dense population made it a particularly high-risk area, so if it’s truly starting to peak there, this would be welcome news for the rest of the world. It could mean the virus’s trajectory might be faster than many predicted, and that shelter in place orders could be having a real impact.

Clearly markets cheered the news, but what does this actually mean for the economy? In the immediate term, not much. Most lockdowns are likely to remain in place for at least another month or two. But as was reported this week, many countries are already planning how to restart their economies. For ones that do, the world will be watching closely to see what does and doesn’t work. Some have even floated the idea of mass antibody testing to determine who has had the virus and potentially has immunity. Unfortunately, the only benchmark we have at the moment is China, where its unlikely official government statistics are telling the full story. The last thing anyone wants is a resurgence in the outbreak that could bring us back to square one.