Don't panic: Market overreactions may turn into opportunities for long term investors
Tuesday 10 March 2020
Demand for safe heaven assets has surged to record levels, with the 10 Y US Treasury yield dropping to a new record level below 0.4% and gold touching a seven-year high above $1,700. The recent reaction reflects fears of increased spreading of the coronavirus at European and global levels and increased uncertainty on the economic outlook, with the news on falling oil prices adding to this uncertainty.
At the time we are writing, major losses are occurring in risk assets, with equity indexes in Europe opening down today by around -6% to -8% and volatility spiking (VIX index above 58, a level not touched since the Great Financial Crisis in 2008)