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With the Pacific G10 Macro Rates Team 

Global Macro Overview
Last week equities and US 10y Treasuries finished the week flat, with volatility metrics going further down as the VIX slid to 36. The main event of last week happened outside of interest rates and foreign exchange markets as front WTI futures contracts traded negative for the first time touching -$40. Part of the move was a technical one, as the rest of the curve failed to exhibit similar volatility, but oversupply in the oil market remained a concern with June WTI contract down almost 40% on the week. 

CIO Market Update with Will Bartleet
CIO and multi-asset portfolio manager at Pacific Asset Management

UK Prime Minister Boris Johnson returned to office after recovering from COVID-19 and warned the nation that ending the lockdown now would risk a “second spike”. 

CIO Market Update with Will Bartleet
CIO and multi-asset portfolio manager at Pacific Asset Management

In the US, the House of Representatives passed the $484 billion aid package. The US Food and Drug Administration warned patients about the risks of taking malaria medications, something that President Trump has suggested as a treatment for COVID-19; there has been no comment yet on his suggestions for tests into using a disinfectant “by injection inside”. 

CIO Market Update with Will Bartleet
CIO and multi-asset portfolio manager at Pacific Asset Management

A further 4.4 million Americans filed for employment benefits, taking the five-week number to 26.5 million. US biopharmaceutical company Gilead released results of Remdesivir, its potential antiviral drug for the treatment of COIVD-19 which showed that drug performed poorly in its first clinical trial. In a change of tone from the US President, Donald Trump said that he disagreed with the Georgia governor’s decision to begin to loosen curbs next week. 

CIO Market Update with Will Bartleet
CIO and multi-asset portfolio manager at Pacific Asset Management

US Treasury Secretary Steven Mnuchin said that “We’re operating under the environment that we are going to open up parts of the economy and we’re looking forward to -- by the time we get later in the summer -- having most of the economy, if not all of the economy, open,”.  

CIO Market Update with Will Bartleet
CIO and multi-asset portfolio manager at Pacific Asset Management

The US government announced a new $470 billion program to support small businesses, including $310 billion to replenish the Paycheck Protection Program which ran out of money last week.  

CIO Market Update with Will Bartleet
CIO and multi-asset portfolio manager at Pacific Asset Management

US crude oil plunged below zero for the first time in history to minus 37.64 a barrel, reflecting the surplus of West Texas crude and the lack of availability (and hence higher cost) of storage.  

With the Pacific G10 Macro Rates Team 

Global Macro Overview
Although financial markets are gradually paying more attention to economic data the actions taken by fiscal and monetary authorities remain the major drivers. Governments across the world are still committed to supporting local economies for as long as lockdown measures are in place.  

CIO Market Update with Will Bartleet
CIO and multi-asset portfolio manager at Pacific Asset Management

China released its first quarter GDP which covered the worst of the economic impact of the lockdown in the country and showed that growth fell by 6.8% compared with the same quarter last year. This marked the largest contraction of economic growth since the China began releasing quarterly data in 1992. After the release of the data, the Chinese authorities committed to provide further stimulus to the economy. 

CIO Market Update with Will Bartleet
CIO and multi-asset portfolio manager at Pacific Asset Management

A further 5 million Americans filed for unemployment benefits last week, bringing the total jobs lost over the last four weeks to 22 million. This means that all the jobs created in the US since 2009 have been lost in just a month.