We have finally seen the first signs of financial dislocation
It was a wild day in the market yesterday as the breakdown extended over to the currencies market where we saw sterling crash and the likes of the aussie and kiwi heavily routed - even today - amid growing pressures for funding in the dollar.
Oil fell by more than 20% to $20 while we also saw a toxic combo of a sharp fall in equities (late rescue by the US government) and a selloff in bonds/Treasuries. On the latter part, we are seeing more of the same today and that is bad news for investors.
The market selling everything is one thing but when we start to see signs of financial dislocation/disorder, it raises the risks of permanent economic damage as many companies and households will find it very difficult to bounce back amid forced deleveraging.
Either way, central banks are already starting to take action to try and calm the situation and the SNB will be next in line to bat later today in the European morning.
0700 GMT - Switzerland February trade balance data
Prior release can be found here. An indication of trade conditions in the Swiss economy. A minor data point.
0830 GMT - SNB March monetary policy decision
The December decision can be found here. Despite all the other central banks stepping up to the plate (and mostly striking out), the SNB isn't expected to cut rates but I view this as a 50-50 decision. The SNB has long reiterated that they have not reached the bottom of the barrel but in cutting rates further, they really must think about the difficulty in raising them in the future. Besides that, the SNB doesn't have much flexibility besides intervening in the FX market - which they are already doing now.
0900 GMT - Germany March Ifo preliminary business climate index
Prior release can be found here. Business morale should see a sharp decline this month considering the current economic circumstances and that is expected to be reflected in the latest survey reading above.
1000 GMT - Eurozone January construction output data
Prior release can be found here. Not a relevant data point whatsoever as this pertains to pre-virus economic conditions.
That's all for the session ahead. I wish you all the best of days to come and good luck with your trading! Remember, stay safe out there.
