As the reporting season unfolds, both for economic numbers and company earnings, the extent of the pandemic’s effect on activity is brought ever more sharply into relief.

Q2 numbers will be extremely dire wherever you look and are likely to provide some volatility.

Central banks, however, continue to be extremely accommodative and prepared to put further measures in place or expand existing measures if necessary. The EU can be at its most coherent in times of extreme duress as the recent agreement on a stimulus package reflects. The Federal Reserve still stands by to provide whatever is needed, ‘we are committed to using our full range of tools to support our economy’ and the time frame of any measures continues to be pushed further out. They have just widened and extended their dollar swap lines with other CB’s as the supply of dollars remains restricted.

Equity indices have displayed some volatility as it becomes more widely appreciated that a large part of the S&P’s rally has been down to the tech sector’s leadership, whilst other sectors have recovered but not to the same extent. Credit remains well supported, which is key, and spreads remain around their post March tights. Sovereign yields are still at levels that offer nothing for any investor.

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