By Ritvik Carvalho
LONDON (Reuters) – From a January blockade in a Chinese province to 10 million infections worldwide, the global corona virus march has shaken the markets every step of the way over the past six months, messing up the plumbing of the global financial system.
Market panic and economic devastation caused by barriers triggered an unprecedented response from policy makers and sowed seeds of recovery.
The following diagrams are intended to capture some of the milestones.
1) CHINA: WARNING SIGNS AND MEASURES
On January 21, there were reports of a "flu-like" virus in China and shortly after the city of Wuhan stopped urban traffic and stopped outgoing flights.
By January 27, the World Health Organization declared an emergency in China and hit the yuan and Chinese stocks. (Graphic: COVID-19 and Chinese markets, https://fingfx.thomsonreuters.com/gfx/mkt/jznpnzxkbpl/Pasted%20image%201593466855465.png)
On February 3, the Chinese central bank boosted https://fingfx.thomsonreuters.com/gfx/editorcharts/xklpyzndovg/index.html with a liquidity injection of $ 174 billion. It is the first of many such measures worldwide. On February 17, interest rates were lowered and more cash was brought into the system.
In early April, Wuhan began to loosen his ban.
(Graphic: The Chinese central bank hoses the markets with liquidity, https://fingfx.thomsonreuters.com/gfx/editorcharts/qzjpqeywzpx/eikon.png)
2) MARKETS ABLAZE
On February 10, the WHO called the virus "a spark that turns into a bigger fire". But world stocks still hit record highs on February 19.
On February 24, as deaths increased in South Korea, Italy and Iran, European stocks suffered their worst day since 2016.
On March 9, the S & P500 saw its largest one-day decline since 2008, and 30-year government bond yields fell below 1% for the first time.
The following week, Wall Street volatility rose above 85 by 85 over the previous month. png)
Global stocks hit a 3 1/2 year low on March 23 before the recovery began. On June 4, Nasdaq Tech stocks beat record highs ahead of COVID.
(Graphic: COVID-19 and world stock exchanges, https://fingfx.thomsonreuters.com/gfx/mkt/yxmpjlnrmpr/Pasted%20image%201593471849178.png)
3) "WHATEVER it takes-2"
The market panic prompted the Fed to raise interest rates on March 3.
(Graphic: Speed, severity of the sale of corona viruses, https://fingfx.thomsonreuters.com/gfx/mkt/yzdpxrxxopx/Pasted%20image%201593472853526.png)
On March 11, the Bank of England cut interest rates to 0.25%. The Fed also rose to 0% in an unscheduled move from March 15th and triggered further political easing around the world.
Click here for an interactive version of the following policy relief table (https://tmsnrt.rs/2A8omnb).
(Graphic: World central banks deliver rate cut bonus png, https://fingfx.thomsonreuters.com/gfx/editorcharts/xegvbkjxwpq/eikon.png)
On March 19, the European Central Bank launched an emergency bond purchase program worth € 750 billion ($ 841 billion).
On March 23, the US Federal Reserve made its first commitment to buy corporate bonds, including selected junk securities. US corporate yields fell 80 basis points in a week and are now at record lows.
(Graphic: Yields fall after the Fed's promise to buy corporate bonds, https://fingfx.thomsonreuters.com/gfx/mkt/bdwpkazblpm/Pasted%20image%201593521877204.png)
4) EUROPEAN TURNS
The crisis forced a turnaround in household thrift, especially in Germany, where a package of up to € 750 billion was announced on March 23. Britain also reversed "austerity measures" with £ 133 billion in pledges.
On May 18, a proposal came up with the potential to change the assets of the euro area: a 750 billion euro recovery fund from the European Union to be financed through the joint issuance of debt instruments. The decisive step for European cohesion has led to the 10-year borrowing cost for the weak link in the euro area, Italy, falling by 50 basis points.
(Graphic: Euro, Eurozone bond markets in the coronavirus crisis, https://fingfx.thomsonreuters.com/gfx/mkt/qmypmgakzpr/Pasted%20image%201593472421049.png)
5) DOLLAR CRUNCH
The meltdown in March got the dollar going and blown out the swap premiums for the greenback. The three-month swap spreads in euro dollars rose to over 120 basis points on March 17, the largest since 2011. Between March 9 and 20, the dollar rose 9%. (Graphic: Dollar remains king in the coronavirus crisis, https://fingfx.thomsonreuters.com/gfx/mkt/xegvbmoxjpq/Pasted%20image%201593521417411.png)
Burdens eased after the Fed opened swap lines with major central banks and later expanded the facility. In early June, the dollar had dropped to the March 10 level.
(Graphic: Euro dollar financing markets recover from stress, https://fingfx.thomsonreuters.com/gfx/mkt/ygdpzwmgzvw/fedswap.png)