‘Just not functioning’: quotes from a tumultuous year in markets


The year 2020 will stand as the time when the coronavirus crisis almost broke the financial markets.

Investors watched with growing horror in March as a stock sell-off turned into a liquidity crisis where even the ultra-safe US government bond market was straining to match buyers and sellers — challenging the most basic assumptions of risk and threatening the underpinnings of the financial system.

Central banks and governments initially struggled to stop the rot, before providing unprecedented programmes of bond-buying and rate cuts that laid the ground for a record-breaking “everything rally”.

Here is the story of a tumultuous year, through the words of those seeing the events unfold first-hand.

‘What makes this concerning . . . is that nobody really knows exactly how this is going to turn out’

Timothy Moe, Goldman Sachs

January 23: Chinese stocks fall on the last day of trading before the lunar bank holiday, after Wuhan, the city at the centre of the coronavirus outbreak, is put under lockdown measures. When markets reopen on February 3, the benchmark CSI 300 has its worst day since mid-2015.

‘This is no longer solely an Asia issue’

Robert Carnell, ING

February 24: Global stocks have their worst day in two years after Italy’s move to quarantine towns brings home that the virus has spread to Europe.

‘Rate cuts will not help restock emptying grocery shelves’

Seema Shah of Principal Global Investors

March 3: The US Federal Reserve makes a 0.5 percentage point cut to its policy rate, hoping to reassure a market panicked by the spreading virus. It has the opposite effect, as investors queried the scale of the move and the effectiveness of monetary easing to deal with a demand shock.

Fed chairman Jay Powell disappointed some investors hoping for a bigger cut to rates © Mark Makela/Getty

‘It is very rare for a demand collapse to coincide with a supply surge . . . The price collapse has just begun’

ROBERT McNally at Rapidan Energy Group

March 9: Brent crude falls a quarter, having dropped 30 per cent at the opening of Asia trading, after Saudi Arabia responds to Russia’s refusal to take barrels off the market by starting a price war.

‘The market has been jolted to the point of breaking’

 Masanari Takada at Nomura

March 12 was a bruising day for markets. President Donald Trump’s ban on most European flights, announced the previous evening, spooked stock investors, and the Fed’s liquidity injection did not manage to restore the mood. Wall Street has its worst day since the 1987 crash.

Trading floors would be shut later in March as the crisis worsened © Andrew Kelly/Reuters

‘There’s a fundamental problem in the Treasury market. It’s just not functioning’

Gregory Peters of PGIM Fixed Income

Strategists struggle to work out what is going on in what is typically considered the world’s deepest and most liquid market, US government bonds, which had begun to seize up on March 11. “In a crisis like this, all the weak spots get revealed,” William Dudley, former head of the New York branch of the Fed, later said. 

‘The market had been primed for a 2008-style response. Instead what we got was the impression of the ECB not being in control’

Richard McGuire of Rabobank

And Christine Lagarde — fresh to the top job at the European Central Bank — triggered a sovereign bond sell-off when she told investors “we are not here to close spreads”, referring to the additional interest rates paid by weaker eurozone borrowers.

ECB chief Christine Lagarde’s initial comments on the crisis were not well received © Thomas Lohnes/Getty

‘I would think there are a lot of people on Wall Street that are very happy. And I can tell you that I’m very happy, I didn’t expect this. And I like being surprised’


March 15: The Fed delivers a surprise Sunday cut to near-zero in its main policy rate. Investors question whether that means monetary policy had reached its limit.

‘A lot of people need cash and they’re liquidating the only thing that they can’

Mike Riddell of Allianz Global Investors

March 18: Supposedly safe government bonds endure periods of indiscriminate selling, as global volatility worsens. Oil prices hit their lowest in almost 17 years and sterling touches its weakest point since the 1980s. “Hell is coming,” said hedge fund manager Bill Ackman in a CNBC interview, warning of the devastating impact of the virus and calling for an immediate lockdown.

‘It’s a bazooka and it was needed. The programmes that had been announced were good but didn’t go far enough. This goes far enough’

Jim Shepard, Mizuho

March 23: The Fed pledges to buy government bonds in unlimited amounts, and to buy corporate debt for the first time, in a dramatic intervention that would calm markets and mark the bottom for US stocks. This came just days after the ECB promised to buy €750bn more bonds with a “no limits” commitment to the eurozone.

“While this is a public health crisis first, there is a real and looming potential for it to spill over into a full-on credit and liquidity crisis,” wrote Alan Waxman, Sixth Street Partners, typifying the mood.

‘This is a high investment-grade company that is now borrowing at usury rates’

John McClain of Diamond Hill Capital Management

April 1: Coronavirus-hit cruiser operator Carnival has to pay double-digit interest rates for its debt lifeline but manages to get the deal away, signalling that the Fed’s grand interventions had restored sentiment.

‘Trump essentially became the de facto Opec president’ 

Helima Croft of RBC Capital Markets

April 13: The Opec cartel of oil-producing nations sign a historic deal to curb their oil output and end a bruising price war — under pressure from the US president, concerned to protect America’s shale sector.

The oil market stunned onlookers in April, with US prices going well below zero © Alexei Andronov/TASS/Getty

‘Too much oil, with nowhere to put it’

Kit Juckes, a senior strategist at Société Générale

April 21: The deal was not enough to offset the coronavirus hit to demand. US crude oil prices crash below zero for the first time ever, after the oil glut left buyers with nowhere to put their oil. “It is probably the most volatile and challenging market we’ve ever seen,” said Douglas King of RCMA Capital, reflecting on the turmoil.

‘The markets are on a sugar high right now. They’re not making much sense to me’

Andrew Left, Citron Research

April 30: US stocks cap their biggest monthly rally since 1987, up almost 13 per cent, as a “fear of missing out” drags buyers back into the market despite the unfolding crisis. Oil prices also rebound.

‘The history of markets is that they always overshoot both ways’

 Lee Spelman, JPMorgan Asset Management

June 8: The blue-chip S&P 500 stock index turns positive for the year, having risen more than 40 per cent from its March low.

‘We see the recovery fund . . . as a game changer for Europe’

Reza Moghadam, Morgan Stanley

July 21: Investors hail a €750bn Covid-19 recovery fund that will bring greater financial integration to the EU and make Brussels a significant borrower in bond markets.

European Commission president Ursula von der Leyen. The EU’s landmark agreement on a €750bn recovery fund buoyed investors © Francois Walschaerts/AFP/Getty

‘Gold has finally come on to Main Street as an asset people actually need to have’

Peter Grosskopf at Sprott

July 27: The precious metal hits a record high, driven by coronavirus worries and yields on other assets being driven lower by central bank intervention.

‘It’s hard to believe but the 2020 bear market is officially over’

Solita Marcelli, UBS Global Wealth Management

August 18: The S&P 500 finally exceeds its previous record high, set in February. It marks a contrast with the US dollar, which has tumbled to a two-year low, as interest rate cuts and concerns over the American economy deter investors from dollar assets.

‘Equities were priced to perfection. That was always going to be difficult to sustain when you have a disconnect between how markets are performing and what global economies are doing’

Alexis Gray OF Vanguard

September 9: Tech stocks suffer a late-summer correction, with hot stock Tesla losing a fifth of its value in a single day. Market nerves had grown over valuations stoked by big bets made in the options market by Japanese group SoftBank.

Tesla typified the 2020 boom for ‘new economy’ stocks © David Paul Morris/Bloomberg

‘This is outrageous demand, which they are going to need for the huge wave of supply on the way’

Peter Goves, MFS Investment Management

October 20: The EU receives the biggest ever order book in global bond markets for the first tranche of its coronavirus-related borrowing. Investors put in bids of €233bn for the €17bn of debt on offer.

‘After the US election, the focus for investors turned back to Covid versus a vaccine. Today, the vaccine is winning’

Mohammed Kazmi at Union Bancaire Privée

November 9: BioNTech/Pfizer’s announcement that its Covid-19 vaccine is more than 90 per cent effective adds to market optimism over Joe Biden’s victory in the US presidential election. Similar announcements from other drug groups would lead global stock markets to their best monthly performance in decades, with economically sensitive stocks leading the way.

Victory for Joe Biden in the election reassured investors concerned by political turmoil from a disputed result © Angela Weiss/AFP/Getty

‘I don’t know what else to say. I’m very humbled by it’

Brian Chesky of Airbnb, on CNBC

December 10: A rollercoaster year was topped off by fresh record highs for tech stocks and a flurry of IPOs that drew parallels with the dotcom boom and bust of two decades earlier. Holiday rental company Airbnb’s shares more than doubled on their first day of trading, after Doordash’s first-day pop earlier in the week.

“We’ve all been around markets for enough time to know this doesn’t end well,” said Jim Tierney of AllianceBernstein.


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