CIBC Asset Management Perspectives A shock to the system

It ll be some time before we know the ultimate scale and duration of the COVID-19 disruption to economic activity and corporate cashflows. But in a move reminiscent of the Global Financial Crisis, we re encouraged to see central banks have stepped into help by rolling out some of their heaviest artillery.

Asset class highlights

If the past is any guide, global equities will bottom well before a bottom in the global economy. Equity markets in 2009 hit their lows months before the worst data for employment and production.

Fixed Income

The U.S. Federal Reserve (Fed) will use unlimited quantitative easing to improve liquidity conditions, alleviate private sector funding pressures and limit Treasury selling by foreigners. To achieve these objectives, 10-year Treasury yields will have to trade between 0.5% and 1.25%.


As the Fed takes measures to address the USD funding squeeze, the upward pressure on the USD will ease and the greenback will come under intensifying selling pressure.


To engineer a more V-shaped recovery, Chinese policy-makers will deliver more stimulus. This will include incentives to boost consumption and target infrastructure, particularly high-tech investment. Policy-makers are seeking not just a short-term cyclical revival, but progress towards long-term development objectives.

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