As COVID-19 caused a global economic shut down in the first quarter of the year and a partial reopening in the second quarter, we recognize that the resurgence of infections is forcing many to reshape their outlook on economic activity. Uncertainty will be the theme for the next six months.
The first half of the year’s challenges have highlighted how difficult it will be to create a clear path forward. In the last 100 years, 2020 will certainly be one of the most challenging. The economic recovery we have seen in some of the data has the potential to be the start of better things, but it could also just be a partial snap back of the severe downturn we saw in March and April. The good news is with each passing day we learn more about the virus and through this knowledge we can better understand how to get back to business. Fortunately, central banks and governments
around the world have pulled out all the stops and continue to impress upon us that they are not done supporting businesses and individuals. More monetary and fiscal stimulus is in the works and is expected to follow the news cycle. However, there are other questions on cash investors’
minds that cannot be ignored, most importantly questions of market liquidity and the possibility of negative rates.