Volatility of historic proportions engulfed financial markets worldwide this week as governments and central banks struggled to craft policy responses to the burgeoning economic impact of the Coronavirus. Global equity markets registered their largest single day decline ever on Thursday while US stocks registered the fastest 20% drop on record as the Dow Jones Index took just 19 days to mark that decline. Most US Treasury yields spent the week slowly regaining ground lost during the prior momentous declines.
The exception to those rate moves was on the short end of the yield curve, as markets are pricing in additional easing at the FOMC meeting this coming Wednesday. A reduction in the Fed Funds target of 50-75 bps is widely expected. The drastic rate moves have left the curve positively sloped, although at significantly lower nominal yield levels than a month ago.