July 6th, 2020

Markets have bounced back in recent weeks on a combination of improving economic data, a lifting of lockdown measures across the globe and of course, a backdrop of central bank support. But some argue this may not be enough: Bank of America rates strategists warn a failure on any of three key axes - monetary policy, fiscal policy or the public health front - could threaten the recovery. They also note ‘insufficient fiscal efforts’ in the euro area and worrying fiscal cliffs in the US and UK. Sentix’s euro zone investor sentiment index rose for yet another month in July, but it still remains in negative territory. Investors polled said they expected that only around 60% of coronavirus-related economic losses would be recovered within a year in the euro zone. That could change with this week’s meeting of the “Eurogroup” of finance ministers, where a new head of the body will be elected and more news on the EU’s proposed $750 billion recovery fund could potentially emerge.
Chart and commentary by Ritvik Carvalho
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