Fathom Recession Watch 04.05.2020

Headlines

• Although President Trump has seen ‘convincing evidence’ that the virus causing COVID-19 came from a laboratory in Wuhan, China, he is ‘not allowed’ to share it with us
• New Zealand reports no new cases of COVID-19 after entering a period of strict lockdown on 26 March – after much of Europe, but at a much earlier stage in that country’s epidemic cycle
• South Korea reports that early indications of re-infection with the virus causing COVID-19 were probably a consequence of limitations of the testing process

With increasing evidence that the trough in economic activity may be behind us, we have made adjustments to our publication schedule. A full Recession Watch will continue to be published on most Mondays, Wednesdays and Fridays. However, on occasions such as today, when we are also holding a Recession Watch Forum, a slimmed down newsletter will appear instead.

In this afternoon’s Forum, we take a first look at some of the possible long-term consequences of the COVID-19 outbreak – by which we mean consequences that will endure even after a vaccine has been found. Logically, one might divide these into three categories: macroeconomics; geopolitics; and the way that we live our lives from day to day. Our focus this afternoon is on the first of these. What will happen to growth, debt and inflation once the pandemic is over?

With many of the world’s major central banks announcing expanded QE programmes that are more or less sufficient to mop up all of the additional government debt issuance resulting from the pandemic, are we at risk of seeing a material pickup in inflation over the coming years? That is certainly worrying some commentators. And it is true that, even those governments that have the ability to issue index-linked securities, continue to conduct the majority of their borrowing in more conventional terms.

Refresh this chart in your browser | Edit the chart in Datastream

Please subscribe here to join us for the Recession Watch Forum

__________________________________________________________________________________

Datastream

Financial time series database which allows you to identify and examine trends, generate and test ideas and develop view points on the market.

Refinitiv offers the world’s most comprehensive historical database for numerical macroeconomic and cross-asset financial data which started in the 1950s and has grown into an indispensable resource for financial professionals. Find out more.