BNP Paribas Wealth Management

 Leveraged hedge funds in the US, especially systematic strategies (risk-parity funds, CTAs, volatility-controlled funds) saw massive deleveraging in equities and bonds. Combined with huge outflows from bond funds, US Treasury yields rose last week. 

 Yesterday, brought a plaisant new developpment. US markets closed marginally up, while Europe grows by 3%... 

 US stocks rebounded from their biggest rout since 1987... 

 The S&P500 rose 4.9% in hopes that President Trump and his team come up with measures such as reducing tax burdens...

 Topic this week: oil. We had a monumental collapse in oil price on Friday and this Monday in Asia. 

 The direction of financial markets remains firmly dictated by news related to the Coronavirus. 

  As discussed recently, the high likelihood of short term unwinding was possible given the overcrowded US equity market, and last week we finally experienced a huge unwinding of growth stocks in a big US sell-off. The swiftness as a result of how far we had climbed. 

The catalyst was the escalating concerns over COVID-19, particularly given the spread in Italy, South Korea and Iran, and this triggered the global market risk-off.