GLOBAL & REGIONAL MONTHLY (Thursday, 4 June 2020)
USA: Unprecedented Q2 economic contraction, to be followed by a strong rebound in H2
EA: The immediate economic shock due to the lockdown seems to have bottomed-out
UK: Q1 GDP figures confirm an unprecedented downturn in economic activity
EM: Heading towards a multispeed recovery across emerging Asia, LatAm & CESEE
CESEE: Output performance above expectations in Q1-2020, optimism that the worst may already be behind
FX: Range break out for EURUSD post EU Recovery Fund details, further upside expected
Rates: European and US yields higher with long end underperforming on smooth reopening and increased supply
EM: EM catch up rally with DM credit despite lack of support from CBs driven by reopening of economies and oil price recovery
Credit: V-shaped recovery for credit despite high profile defaults. HY catching up with IG
USA: Fed likely to enhance its forward guidance about the policy rate and future asset purchases
EA: ECB increased its PEPP envelope as expected, with a horizon extension to at least end-2021
UK: BoE expected to ease policy further nearterm but negative rates unlikely anytime soon
CESEE: EU Recovery Fund added to the arsenal against the pandemic fallout
Key Downside Risks
More prolonged global economic downturn: A second wave of COVID-19, escalation of geopolitical conflicts such as rising US/China trade tensions
Idiosyncratic factors in EM: EMs that entered the crisis with idiosyncratic defects will need more time and resources to recover
Special Topics in this issue
– How is China coping after the lift of the lockdown?
– US/China tensions on the rise again
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