It’s clear the market believes a sufficient bridge is being built between the other side of this viral crisis and today's economic slowdown. ANZ Research is hopeful it is right but believes risk remains.
As such, the conversation needs to turn to the duration of the slowdown and when we can expect to see some normalisation.
In Europe, a couple of countries have indicated they are bringing forward their ‘reopening’. Austria will become a very important place to watch.
On the flipside, we have also seen places like France extend the duration of their lockdowns.
There are a few conclusions to be drawn from this mixed news. The first one, which is obvious, is the countries still struggling with containment are the ones that were slowest to react to the crisis in the first place.
The lesson from that is when economies start to reopen, early action is critical if any second waves occur. Restarting any economy is going to be a sporadic process for as long as we live with COVID-19. Experience suggests authorities should not wait around to see whether or not the spread of the virus going to accelerate.
The second thing is countries with advanced social distancing policies (like Italy, France, the UK and Spain) are not seeing the same pace of slowing as China. What that says is, again, it will be slow going to flatten the curve.
Together with the evidence of early intervention, it is clear there is a real risk the disruption to the global economy will last longer than the market or policymakers hope.
Daniel Been is Head of FX and G3 Research at ANZ