March 2020 Market Recap
The month of March saw a large scale manifestation of the coronavirus on the American soil. “Flatten the curve” has become a nationwide goal, and staying home has become a civic duty. As we shut down businesses to contain the situation, we know that there will be material impact on our economy. It was a month that set multiple records, so it is difficult to choose one topic to review. What stood out in particular was investor behavior that affected fixed income trading. As the risk-off sentiment built around the world, investors favored cash over everything else and sold whatever they could. Even assets that are normally considered safe havens, such as U.S. Treasury bonds, gold and money market funds, did not escape the selloff. The selloff was indiscriminate and bled into the corporate, municipal debt, and money market funds, creating major liquidity problems.
There is still so much we do not know about how the upcoming weeks will unfold. In an effort to “flatten the curve,” we find the global economy at a near standstill. Many western nations, including ours, are still on the left side of this curve with confirmed cases climbing, and we struggle to test our citizens for COVID-19 and to treat the sick. Going into April, we will undoubtedly begin to see economic data directly reflecting the injury of the shutdown, and there may be more volatility ahead in the equity markets and other risk assets. As a society, however, we take comfort in that there have been other challenges we have overcome in history, and that we will overcome the current crisis as well. When we take a long-term view of investing, construct robust portfolios, and rebalance prudently, we can withstand what are truly short-term shocks that will eventually recede into the background of a long horizon.
For more information on the March 2020 Market Recap, please contact CBIZ Investment Advisory Services.
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