February 2020 Market Wrap

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COVID-19 dominated the news the entire month and rattled the financial markets. Equity markets collapsed in the past week with >10% drop, the worst sell off since the 2008 Global Financial Crisis. The 10-year UST yield plunged to a record low (below 1.2%) on Friday, as investors dumped risky assets and bid for safer government bonds.

Traders offloaded currencies associated with a possible recession and with reliance on China (AUD, NZD, CAD), piled on safe haven assets (JPY, CHF), and unwind carry trades, resulting in a surge in EUR (low-yielding nature of EUR has made it the dominant funding currency for stocks/carry trades).

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