In January 2020, as COVID-19 spread in China, Western Asset assembled a cross-disciplinary task force to analyze the virus and its threat to the global economy.
Shocks & Bonds
Insights to help navigate market volatility and economic impact
amid the COVID-19 pandemic
"This is an extraordinary period, both a health and an
economic crisis that is unprecedented in financial history."
"The key point, given the uncertainty of the economic path, is portfolio construction has to be built on a solid foundation. You want to make sure that the number-one building block of your portfolio are securities that can endure a sustained period of economic weakness, should it become the case, but can also benefit should you get a recovery in a shorter period of time."
–Western Asset CIO Ken Leech
Market Impact of COVID-19
Market Impact of COVID-19
Both the US and global economies entered the crisis with strong fundamentals.
The US economy is well positioned to weather a temporary economic slowdown, especially considering the Fed’s swift policy response and the $2 trillion fiscal stimulus under the CARES Act that authorizes payments to individuals beginning in mid-April 2020.
A resumption of economic activity could come swiftly.
This experience is not the same as the global financial crisis (GFC); while the timing of the voluntary business shutdown is still unknown, we believe the global growth shortfall will be transitory. Currently, we see a U-shaped recovery with the resumption of economic activity commencing in late 2Q20 and 3Q20, then picking up steam in 4Q20. We hope to be back to trend-line growth as we enter 2021.
Public safety will be balanced with economic pain.
While business closures and social distancing are intended to save precious lives, the near-term economic impact may be very painful. The massive efforts already seen by governments and central banks to provide fiscal and monetary stimulus should help mitigate some of the economic damage.
Coronavirus Task Force
May 7, 2020
Shocks & Bonds Blogs Posts
April 01, 2022
Private-sector jobs increased by 426,000 in March, on top of a +129,000 revision to the February estimate. Job gains have been fairly steady, robust, and widespread throughout the last year. Recent gains pale alongside the massive increases that occurred in late-2020, but that is only to be expected.
Additional Resources
Third Quarter 2020
Summary of the key drivers behind our global outlook, how we’re positioned in broad market portfolios and a more detailed description of where we see value in today’s markets.
Third Quarter 2020
Check out our latest holistic assessments of fixed-income trends, technicals and relative value across the entirety of the global credit market.
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