Global stocks jumped and US equity futures traded just around 2,800 on Tuesday after Chinese trade data came in better than expected and some countries tried to restart their economy by partly lifting restrictions aimed at containing the coronavirus outbreak.

Wall Street indexes ended mixed on Monday. The Dow and S&P 500 fell, but a 6.2% gain in Amazon shares helped the Nasdaq end higher.

“The pullback in US equities should come as no surprise in light of last week’s historic rally,” said Mark Haefele, chief investment officer at UBS Wealth Management, noting the S&P 500 posting its best weekly performance since 1974. “Sentiment will zigzag until there is more clarity on formal measures to reopen major economies. More broadly, even though global markets have rebounded, it is difficult to say with any certainty whether the bottom has been reached.”

European stock markets opened stronger, with the pan-European STOXX 600 index rising 0.6% to its highest since March 11, with Spanish shares gaining 1.5% as some businesses re-opened, although shops, bars and public spaces were set to stay closed until at least April 26. Market sentiment was boosted by data showing China’s exports fell only 6.6% in March from a year ago, less than the expected 14% plunge. Imports fell 0.9% compared with expectations for a 9.5% drop.

The gains in Europe took MSCI’s All-Country World Index .MIWD00000PUS, which tracks shares across 49 countries, up 0.5%.

The Stoxx Europe 600 Basic Resources index is among leading sector gainers after China disclosed numbers showing trade performed better than expected in March, with China exports declining 6.6% in dollar terms in March from a year earlier (exp.-13.9%) while imports fell 0.9% (exp. -9.8%), the customs administration said Tuesday, indicating that supply chains may be adapting better than thought. Specifically, this is the data that China reported:

• Exports: -6.6% yoy in March vs Bloomberg consensus -13.9%. January-February: -17.2% yoy. Month-over-month export growth: +5.4% non-annualized in March vs. -7.8% in January-February.
• Imports: -0.9% yoy in March vs consensus: -9.5%. January-February: -4.0% yoy. Month-over-month imports growth: +0.8% non-annualized in March vs. -2.6% in January-February.
• Trade balance: US$+19.9bn NSA vs consensus US$+20.0bn in March. January-February: US$-7.1bn.

“Although further slowdown in the pandemic’s spreading may keep sentiment supported, we are still reluctant to trust a long-lasting recovery, and we prefer to take things day by day,” said Charalambos Pissouros, analyst at JFD Group.

Earlier in the session, MSCI’s broadest index of Asia-Pacific shares excluding Japan rose 1.3% to its highest in a month, up 20% from a four-year low on March 19. Chinese shares gained, with the blue-chip index up 1.2%. Australian shares were up 1.7% and Japan’s Nikkei rose 2.8%. Hong Kong’s Hang Seng was up 0.9%.

Earnings season kicks off this week with some of the world’s biggest banks reporting, giving investors their first glimpse of how bad the hit to global profits will be. Fidelity International analysts expect earnings to almost halve at companies globally this year. While Goldman Sachs Group forecasts advanced economies will shrink about 35% this quarter, investors are focusing on whether trillions of dollars in stimulus and rescue plans will fuel a rally in risk assets when the infections curve flattens.

In addition to the start of earnings season which begins with JPM reporting today, investors are also eyeing the easing of virus-related restrictions in some regions for further trading cues.  In Europe, thousands of shops across Austria are set to re-open on Tuesday. Spain recorded its smallest proportional daily rise in the number of deaths and new infections since early March and let some businesses return to work on Monday.

In the United States, which has recorded the highest number of casualties from the virus in the world, President Donald Trump said on Monday his administration was close to completing a plan to re-open the U.S. economy. However, some state governors say the decision to restart businesses lies with them.In the latest developments, India and France extended their lockdowns and the British government is weighing similar steps.

In rates, 10Y yields dipped modestly to 0.75%, while Italian bonds fell after a report that the government is set to seek a significant deficit deviation. Bunds dropped as markets rose.

In commodities crude was up 0.85% at $22.55 a barrel, compared with a January peak of $63.27. Brent rose 1.3% to $32.16  a barrel. Oil prices rose around 1% after the U.S. Energy Information Administration (EIA) predicted shale output in the world’s biggest crude producer would fall by a record amount in April, adding to cuts from other major producers. Gold prices clung to highs not seen in more than seven years at $1,720.1 an ounce.

In currencies, the dollar extended losses on the back of the U.S. Federal Reserve’s massive new lending program. It weakened against the Japanese yen to 107.7. The euro was up 0.2% at $1.0929. The risk-sensitive Australian dollar jumped 0.6% to $0.6420.

Expected data include import and export prices. Fastenal, J&J, JPMorgan and Wells Fargo are among companies reporting results.

Market Snapshot

• S&P 500 futures up 1.3% to 2,793.75
• MXAP up 1.6% to 143.26
• MXAPJ up 1.3% to 461.49
• Nikkei up 3.1% to 19,638.81
• Topix up 2% to 1,433.51
• Hang Seng Index up 0.6% to 24,435.40
• Shanghai Composite up 1.6% to 2,827.28
• Sensex down 1.5% to 30,690.02
• Australia S&P/ASX 200 up 1.9% to 5,488.11
• Kospi up 1.7% to 1,857.08
• STOXX Europe 600 up 0.9% to 334.66
• German 10Y yield fell 0.3 bps to -0.35%
• Euro up 0.04% to $1.0918
• Italian 10Y yield fell 6.0 bps to 1.419%
• Spanish 10Y yield rose 3.2 bps to 0.814%
• Brent futures down 0.3% to $31.64/bbl
• Gold spot up 0.3% to $1,720.80
• U.S. Dollar Index down 0.1% to 99.21

Top Overnight News from Bloomberg

• Bloomberg’s monthly survey puts contraction in the euro area at more than 10% in the January-June period, with most of the hit – – 8.3% — in the second quarter. Even with an expected rebound later in the year, the bloc’s output will still decline more than 5% in 2020
• U.K. Foreign Secretary Dominic Raab told reporters it was likely to carry on and the government’s chief scientific adviser saying he expects the daily rate of deaths to continue to rise
• The Federal Reserve will start buying commercial paper on Tuesday, just as Wall Street braces for an earnings season likely blighted by the coronavirus outbreak
• Japanese Prime Minister Shinzo Abe said he wanted to start cash handouts for individuals and businesses hurt by the coronavirus pandemic as soon as May
• China has started the process of potentially merging its two biggest brokerage firms to create a company that can better compete with the global investment banks as the country opens up its financial markets, according to people familiar with the matter

Top Asian News

• China’s Trade Fell Less Than Expected Even as Virus Spread
• India’s Modi Says Nationwide Lockdown Extended Through May 3
• Indonesia Surprises by Holding Key Rate, Cuts Reserve Ratio
• Air Arabia Is Said to Seek State Aid and Delay New Venture
• World’s Most Battered Corners in Bull Zone on Newfound Optimism

European equities remain mostly firm following a broad pickup in sentiment across APAC and US regions, with the former also aided by better-than-forecast Chinese trade data overnight. That being said, eyes turn to the resumption of earning season to gauge the initial impact of the virus outbreak on large-cap businesses. For reference, states-side earnings today include Johnson & Johnson (4.1% weighting in DJIA), JP Morgan (2.9% weighting in DJIA) and Wells Fargo. Back to Europe, UK’s FTSE 100 (-0.4%) lags regional peers as a firmer Sterling weighs on exporters, whilst reports also noted that the UK gov’t is poised to extend its lockdown to May 7th, although some reports over the weekend touted May 25th. Other European bourses see broad-based gains, with some possibly underpinned by comments from EU’s Competition Chief Vestager, who said member countries should purchase stakes in companies to repel the threat of Chinese takeovers. Broader sectors are somewhat mixed with underperformance in the Energy Sector, whilst Healthcare names lead the gains thus far. The sector breakdown does not give much by way of additional colour, although Travel & Leisure resume its downbeat performance as the sectors see no reprieve for the near future, whilst Carnival (-7.0%) sees pressure after the group is to extend its suspension on North American cruises. In terms of individual movers; AstraZeneca (+6.0%) props up the healthcare sector as shares were bolstered at the open after the Co. said its Tagrisso Adjuvant trial has been overwhelmingly positive. Separately, Co’s Koselugo has been approved in the US for paediatric patients with a rare genetic condition. Finally, the Co. has also initiated the Calavi clinical trials with Calquence against COVID-19. Renault (+3.0%) remains firm despite a cancellation to FY19 dividend after the Co. is to transfer its 50% stake in Dongfeng Renault to Dongfeng in a non-binding memorandum. Publicis (-0.3%) saw losses at the open after reporting that organic revenue dell 2.9% YY, although the Co. launched a EUR 500mln cost reduction plan. Accor (-2%) saw early-morning pressure after French Finance Minister Le Maire said he cannot say when hotels and restaurants will reopen. Note: Eurex and Deutsche Boerse have been experiencing technical problems that are being investigated.

Top European News

• Austria Tests Easing Lockdown With Some Stores Reopening Tuesday
• GAM Accelerates Cuts as Assets Plunge by $13 Billion in Quarter
• Norwegian Air Plunges 63% on Plan to Convert Debt to Equity
• Crisis in Russia Puts $13 Billion of Remittances at Risk
• Crisis Gives Germany Sense of Vindication for ‘Black Zero’

In FX, the Dollar remains depressed after last Thursday’s mega Fed stimulus package and ramp up in Gold through the Usd1700/oz threshold to fresh 7 year peaks, with the DXY unable to regain a foothold above 99.500 within a 99.432-121 range amidst selective risk-on flows in wake of latest COVID-19 updates, the eventual OPEC+ crude output accord and Eurozone Finance Ministers finally agreeing on a substantial fiscal stimulus package. Ahead, US import export prices are scheduled, but unlikely to prompt much, if any reaction, but Wednesday’s data releases are top tier.

• GBP – The Pound is off best levels, but still the best performing G10 currency after UK PM Johnson’s discharge from hospital. Cable remains comfortably above the 1.2500 handle and briefly crossed the 50 DMA at 1.2568 to print a fresh 1.2575 recovery high before reports from the ONS emerged raising the number of fatalities in England and Wales by 15% vs NHS figures published to April 3rd, while Eur/Gbp is back above 0.8700 from circa 0.8784 at one stage awaiting revised GDP and deficit estimates from the OBR under various coronavirus scenarios due at 12.00BST.
• ZAR – In contrast to Sterling, Rand gains against the Buck were initially reversed from 18.0000+ to just shy of 18.2000 in wake of an unexpected 100 bp SARB rate cut that was announced via social media and came after May’s scheduled policy meeting was brought forward. However, Usd/Zar subsequently soared beyond 18.3300 as Central Bank Governor Kganyago
• JPY/EUR/CHF/AUD/NZD – All firmer vs the Greenback, as the Yen defies improved risk sentiment to hold at the upper end of 107.79-39 parameters, but not quite close enough to disturb decent option expiry interest protecting 107.00 at 107.05 (1.1 bn). Note, no real rection to latest BoJ source talk about increased and wider QE remits at this month’s meeting that might include expanding the range of assets accepted for collateral. Similarly, the Euro is hovering closer to the top of 1.0957-06 confines and the Franc nearer 0.9637 than 0.9679 even though latest weekly Swiss sight deposits indicate significantly more intervention by domestic banks on behalf of the SNB. Elsewhere, some loss of overnight momentum forged on the back of Chinese trade revealing a surprise rise in Yuan denominated imports for the Aussie and Kiwi, but both retaining sight of big figure/psychological resistance marks at 0.6400 and 0.6100 respectively.
• CAD/NOK/SEK – In keeping with the rather muted response following knee-jerk relief in oil on the aforementioned OPEC+ pact, the Loonie is paring advances from around 1.3863 to sub-1.3900 as attention switches towards tomorrow’s BoC meeting and the prospect of downbeat/dovish guidance, assuming no further action. Meanwhile, the Norwegian Krona has also retreated from almost 11.1700 vs the Euro to 11.2800, but its Swedish peer showing a bit more resilience above 10.9000 due to signs of the case and death count from nCoV flattening.
• EM – The Lira is struggling to contain losses below 5.7900 amidst heightened coronavirus contagion and the Turkish banking regulator slashing FX swap and derivative limits, while the already unstable political backdrop has been rocked by the resignation of the country’s Interior Minister.

In commodities, WTI and Brent front-month futures reverse course after initially eking mild gains following the fallout of the OPEC+ and G20 ad-hoc meetings which failed to spur a rally but more-so stemmed declines in the complex (in the short-term at least). As a recap for European players, OPEC+ agreed to cut joint output by 9.7mln BPD, starting on 1 May 2020, for an initial period of two months that concludes on 30 June 2020. For the subsequent period of 6 months, from 1 July 2020 to 31 December 2020, the total adjustment agreed will be 7.7mln BPD. It will be followed by a 5.8mln BPD cut from 1 January 2021 to 30 April 2022. The baseline for the calculation of the adjustments is the oil production of October 2018, except for the Kingdom of Saudi Arabia and Russia, both with the same baseline level of 11.0mln BPD. The agreement will be valid until 30 April 2022; however, the extension of this agreement will be reviewed during December 2021. Saudi, UAE and Kuwait all pledged voluntary over-compliance, whilst G20 is to curtail output by some 3.7mln BPD. Yesterday, Saudi Aramco cut their OSPs for several grades for the second month in a row despite the output cut deal; albeit, OSPs for all grades to the US were raised. The Arab Light discount to Asia reflects the supply glut. Furthermore, Russian Energy Minister Novak said he met with domestic oil producers and they supported the OPEC+ deal, while he added that total oil output cuts in May-June will total between 15-20mln BPD. WTI straddled around USD 22.50/bbl in early trade before briefly dipping below USD 22/bbl, whilst Brent meanders just below USD 31.50/bbl, having confirmed to the modest sell-off during the session The difference between the contracts meanwhile remains wider to the tune of around USD 9.50/bbl vs. a pre-OPEC sub-5/bbl number. Elsewhere, spot gold holds onto a bulk of yesterday’s gains and remains north of USD 1700/oz and near recently-set 7yr highs given USD weakness and as investors stock up on the yellow metal following the liquidity-induced declines last month. Copper meanwhile has given up the gains seen during the APAC session after Freeport-McMoRan said it will temporarily shut its Chino copper mine (produced 88k tons of copper in 2019) due to the virus outbreak, albeit the red metal remains caged in a narrow 2.3250-2.3480 band.

US Event Calendar

• 8:30am: Import Price Index MoM, est. -3.2%, prior -0.5%; Import Price Index YoY, est. -5.0%, prior -1.2%
• 8:30am: Export Price Index MoM, est. -1.9%, prior -1.1%; Export Price Index YoY, prior -1.3%

DB’s Jim Reid concludes the overnight wrap

I hope you all had a relaxing if probably a little strange Easter. Today is actually 10 years to the day that the second more dramatic eruption of Icelandic volcano Eyjafjallajökull occurred. The following day all European air travel was shut down for a week. Imagine if you’d had a big trip planned for your 40th or 50th birthday that week, saw it cancelled and vowed that in 10 years’ time you’d celebrate your next major landmark with an even bigger trip to make up for it. I feel for you this week it’s that’s you!! I certainly won’t be arranging a big trip for mid-April 2030!

So strange times indeed and we come back from Easter still reflecting on two big events that occurred late on Thursday. Although this crisis is unique in its making and is clearly not the fault of anyone in financial markets, it is clearly exposing two of the biggest fault lines in the financial system over the last two decades. Firstly, Thursday saw the latest instalment of a 20- to 25-year super cycle where the authorities have been so reluctant to see the creative destruction that’s so important to successful capitalism that they had to make another stunning major intervention, and secondly, we saw the latest evidence that a European monetary union without fiscal union was always going to involve sporadic but hugely existential risks to the EU and help to create ever more fraught politics.

On the first one, ever since the Fed of the late 1990s decided to bail out the financial system post the LTCM collapse, we’ve had rolling state sponsored capitalism and large moral hazard. This has meant that each subsequent default cycle (or mini market cycle) has been less severe than the free market parallel universe version would have been and has left increasingly more debt in the system as a result and meant that the intervention necessary to protect the system has got greater and greater. In my opinion, it also helps lock in lower productivity as you keep more low/no growth entities alive.

On Thursday, the Fed announced the details of their $2.3 trillion to support the US economy. The main additional features within credit was the buying of any eligible corporates that were IG rated before March 22nd and also HY ETFs. For fallen angels this is huge moral hazard as a lot of BBB-rated companies have seen their ratings downgraded in recent years due to: 1) central bank inspired ultra-low interest rates encouraging them to lever up, and 2) a related desire to return value to shareholders, especially through share buybacks. In terms of buying HY ETFs while this is planned to be small in terms of size, it is the first time a major central bank has purchased HY corps and therefore opens the door for more aggressive interventions in lower rated credits going forward. As an example of the impact, Ford which became the 2nd largest fallen angel in history in late March, saw its 5.875% August 2021 bond yields fall from 8.8% to 4.9% on Thursday on a YTM basis after the announcement (closed 5.6% yesterday). US HY and IG tightened -85bps and -22bps on Thursday and then a further -26bps and -15bps, respectively, yesterday. For those looking for more details on the Fed announcement, Craig has published a couple of reports with the first (link here) providing details on the facilities and the second (link here ) details on the eligible universe.

While I would stress that in the face of a global pandemic, there has to be some sympathies with these policies, had markets not been repeatedly bailed out over the last 20-25 years the authorities wouldn’t have needed to be as aggressive. It also makes me wonder what could ever allow us to see free market creative destruction again in my lifetime. When we see the subsequent recession after this one you’ll again start from even higher debt and the same issues will come up albeit with a much less severe economic scenario than the covid-19 one.

I can hear the refrain from investors in say 2025 when credit looks too tight for the late cycle risks. They’ll say that it’s impossible not to be long as the Fed has their back and they’ll miss out if they are not fully invested. Understandable but a very bad way of ensuring capital is allocated in the most growth enhancing manner. I’ll be coming back to talk much more about this in the weeks ahead so I’ll leave it there for now.

Sticking with the Fed, yesterday the NY Fed announced that from May 4 onwards it will conduct one rather than two overnight repo operations each day, a step that will halve the amount available to $500bn. It also plans to halve the frequency of its three-month repo operations, which also have a maximum size of $500bn apiece, to once every two weeks, although it will continue to do one-month actions every week. The accompanying statement read that the decision was taken “in light of more stable repo market conditions.”

As for Europe in terms of what has been agreed, best to read Mark Wall’s blog here from Thursday night. As he discusses, there is much ambiguity in the plan. Perhaps most ambiguity exists around whether the ESM is accessed by a number of countries and thus removing the stigma for Italy where it’s a politically sensitive issue to access it and accept conditionality. In these circumstances if it unlocks the ECB to buy short-term government debt via the OMT program it could take some pressure off the capital keys question within the PEPP. However, at this point we don’t know whether this form of the ESM unlocks OMT, which is part of the ambiguity. In speaking to Mark last night it seems Italy don’t plan to use the ESM and will focus attention on the leaders’ meeting on 23 April and making sure that the recovery fund is as good as it can be.

The summit closed the door on Eurobonds and my thoughts on this is that if they are not going to be seriously considered in such a catastrophe then it’s pretty hard to imagine the scenario we get them in the future or see meaningful steps towards fiscal union. To be fair this was never going to happen in this response after all the northern countries’ negativity towards it but it’s now inevitable that non-core country debt is going to go up at an even faster pace due to Covid-19 (and it’s after effects) than it is in core countries. The politics of this will resonate and it will be worth watching in Italy especially. Regardless of the short-term impact, the fault-lines in the European construct are being exposed again by this crisis. This will have ramifications further down the line.

Turning to markets now. Yesterday in the US, the S&P 500 retreated -1.01% ahead of earnings season and following its 8th best week on record, but did close off intra-day lows of c.-2.5%. Technology and Consumer Discretionary (led by stay-at home-stocks Amazon and Netflix) outperformed on the day, with the NASDAQ up +0.48%. Possibly showing some nerves ahead of earnings, Bank stocks, which are early reporters, were the second worst performing sector in the S&P 500, down -4.13%. As risk fell, fixed income was relatively quiet until a small sell-off at the end of the day. US 10yr Treasury yields rose 5.2bps to 0.77% and longer dated 30yr yields climbed 6.4bps to 1.41%. Elsewhere, Gold reached its highest closing level since November 2012, gaining 1.10% on the day to finish at $1715/oz.

After nearly a week of negotiations between OPEC+ and G20 oil ministers, we got a late Sunday resolution from the oil producing nations to end the price war and cut production by 9.7million barrels a day based on headline numbers. This compared with reports out last week suggesting a 10 million barrels. However, as our colleague Michael Hsueh noted yesterday, given a creative baseline level, the actual cut from March levels will be roughly -8.4million barrels a day at most and there are reasons to expect not all of the cut will happen immediately in May. The expected demand decline continues to dwarf the reduction in supply at least in April and perhaps in all of Q2. Michael sees pressure on oil prices remaining to the downside in the near term. See the link to his full note here. Brent futures had gapped over 6 % higher in early trading, before quickly falling and then retracing the entirety of that move to close just +0.83% higher.

Moving onto the virus, full details will be in our sister daily the Corona Crisis Daily. In brief global cases have risen to nearly 2 million over the holiday weekend from 1,518,719 on Thursday. The weekend saw a massive amount of slowing of new cases growth in the US and Europe though. However, will the recent pattern of lower Weekend/Monday rates of increases in cases/mortality for the US, UK, Germany and France be even worse over Easter? We won’t know until the reporting catches up later in the week.

A quick refresh of our screens shows that most major markets in Asia are up this morning. The Nikkei (+2.19%), Hang Seng (+0.62%), Shanghai Comp (+0.68%) and Kospi (+1.68%) in particular have posted gains. In FX, the US dollar index is trading down -0.17% while the Norwegian krone is up +0.95% leading the advance amongst G-10 currencies. Elsewhere, futures on the S&P 500 are up +1.20% this morning ahead of the start of earnings season. In commodities, Brent crude oil prices are up +1.54% while most base metals are also trading up with iron ore up +1.08%. Gold is also trading up +0.18% this morning.

Contributing to the stronger tone this morning was China’s March export data, which showed exports declining -3.5% yoy (vs. -12.8% yoy expected) and imports rising +2.4% yoy (vs. -7.0% yoy expected) in local currency terms. In USD terms, exports were down -6.6% yoy (vs. -13.9% expected) while imports were down -0.9% yoy (vs. -13.9% yoy expected). Our Asia strategists make argument that the better-than-expected numbers could be due to the fact that as labor mobility increased in China in March as lockdowns got lifted it helped the country to clear the backlog of export orders. A word of caution though that the improvement in exports could be temporary as the majority of the world went on lockdown in April and Chinese authorities are continuing to highlight that the export headwind China is facing remains strong. Another detail worth attention from the release is that the China’s imports of pork and soybeans from the US rose 6.6 times and 2.1 times, respectively, in Q1 2020. Overall, China’s agriculture imports from the US rose 110% in 1Q. This could be a sign that China is trying hard to stick to its commitment under Phase 1 of the trade deal with the US.

As for the rest of this week the main highlights are the start of US Q1 earnings today and China Q1 GDP on Friday. In addition every week initial jobless claims are now going to be a big event. With regards to earnings, 33 companies in the S&P 500 report including many financials. A number of firms have already withdrawn their guidance as a result of the coronavirus, but it’ll be interesting to see the first impact of the shutdowns in March and what companies say about any visibility they have. In terms of the highlights, today we’ll hear from Johnson & Johnson, JPMorgan Chase and Wells Fargo. Then tomorrow reports come from UnitedHealth Group, Bank of America, ASML, Citigroup and Goldman Sachs. Thursday sees Abbott Laboratories, BlackRock and BNY Mellon report, before Friday sees releases from Danaher, Honeywell and Morgan Stanley. Bank earnings will be fascinating as the surge in volatility will help trading revenues but the loan losses won’t have come through yet. Will they make big provisions or will they see all the schemes in place to stop companies going bust and be relatively sanguine about this.

For China’s Q1 GDP figures on Friday, the consensus expectation on Bloomberg is for a year-on-year decline of -6.0% in Q1, down from a 6.0% year-on-year expansion in the last quarter of 2019. This would represent an astonishing deterioration without precedent in the quarterly data we have going back to 1992.

Other data to look for in the US are the start of some March hard data, which will capture the initial part of the slump. These include retail sales, industrial production and capacity utilisation tomorrow, followed by building permits and housing starts on Thursday.

In addition to data one thing that’s always closely watched is the release of the IMF’s semi-annual World Economic Outlook, which is coming out today. To be fair it will probably just catch up with the consensus huge declines expected from all economists but it will no doubt capture some headlines.

Before the day-by-day rest of the week ahead calendar let’s briefly review last week. It was a week that saw some equity markets enter technical bull market territory after virus curves flattened and the Fed deployed further aggressive interventions in the US. The S&P 500 rose +12.10% on the week (+1.45% Thursday), the best week since October 1974 and the 8th best week out of 4,184 weeks on record since January 1928. The index also entered a bull market, rising +24.69% from the index’s closing lows on March 23rd. European equities rose slightly less than the US, with the Stoxx 600 up +7.36% over the 4 day week (+2.24% Thursday), and is now up +18.64% off the March lows. The DAX rose +10.91% (+2.92% Thursday) to rise +25.15% from lows to finish the week in bull market territory itself. Asian equities also rallied last week, though on a full 5 days basis. The Nikkei rose +9.42% (+0.79% Friday), while the CSI was up a more moderate +1.51% (-0.62% Friday) and the Kospi gained +7.84% (+1.33% Friday) on the week. As risk sentiment improved and global equities rose, the VIX fell -5.1pts over the course of the week to finish at 41.7, the lowest closing level in over a month. Further highlighting the effects of the Fed’s actions late in the week and the improvement in risk sentiment, credit spreads tightened significantly over the week. US HY cash spreads were -147bps tighter on the week (-85bps Thursday), while IG tightened -47bps on the week (-22bps Thursday). In Europe, HY cash spreads were -89bps tighter over the 4 days (-37bps tighter Thursday), while IG was -29bps tighter on the week (-14bps Thursday).

Ahead of the OPEC+ and the separate, but interwoven G20 oil minister meetings this past weekend, crude failed to maintain the extreme rally of the prior week. Brent fell -7.71% (-4.14% Thursday) while WTI fell -19.69% (-9.29% Thursday) as sentiment toward a broad based deal started to sour. Elsewhere in commodities, even as risk rallied, gold rose +4.68% over the week (+0.77% Friday) on the back of further monetary stimulus and a -1.64% weekly drop in the Bloomberg dollar index.

With equity prices improving globally, sovereign bond yields rose on the week in both Europe and the US even as the stimulus measures on Thursday saw bonds rally with risk assets. US 10yr Treasury yields rose +12.4bps (-5.3bps Thursday) to finish at 0.72%, while 10yr Bund yields increased +9.4bps (-4.1bps Thursday) to -0.35%. Even prior to the deal being reached by the European commission peripherals spreads started tightening. Italian yields tightened -5.4bps over the 4 days (-2.0bps Thursday), and Spanish 10yr bonds tightened -5.3bps (-1.8bps Thursday).