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Տող 1.
[[Կատեգորիա:Government spending]]
[[Կատեգորիա:Tax]]
[[Կորոնավիրուսային համավարակ]]<nowiki/>ով ([[COVID-19 pandemic]]) պայմանավորված տնտեսական ցնցումները ունեցավ լայնածավալ և լուրջ ազդեցություն [[ֆինանսական շուկա]]<nowiki/>ների վրա՝ ներառյալ [[Ֆոնդային բորսա|ֆոնդային]], պարտատոմսերի և ապրանքային (ներառյալ հում նավթի և ոսկու) շուկաները: Հիմնական իրադարձությունները ընդգրկեցին [[Ռուսաստան]]<nowiki/>ի և [[Սաուդյան Արաբիա|Սաուդյան Արաբյիա]]<nowiki/>յի միջև նավթի գնով պայմանավորված պատերազմը, ինչը չհաջողելով հասցնել [[Նավթ արտահանող երկրների կազմակերպություն|Նավթ արտահանող երկրների կազմակերպության]] համաձայնագրի կնքմանը, հանգեցրեց հում նավթի գների անկման և ֆոնդային բորսայի վթարի 2020 թվականի մարտ ամսին: Շուկաների վրա ունեցած ազդեցությունը կորոնավիրուսային համավարակի ազդեցության մի մասն է և ընդգրկված է բազմաթիվ տնտեսական հետևանքների մեջ:
== Ֆինանսական ռիսկ և երկրի ռիսկ ==
Եվրոպայում և ԱՄՆ-ում կորոնավիրուսով պայմանավորված սահմանափակումները տնտեսագետները, վարկային և երկրի ռիսկի փորձագետները փորձեցին փոխել իրենց գնահատականները ճգնաժամի հետեւանքով առաջացած աննախադեպ աշխարհատնտեսական խնդիրների լույսի ներքո: Համաշխարհային կենսաթոշակային խորհրդի (World Pensions Council) տնօրեն եւ Համաշխարհային բանկի գլոբալ ենթակառուցվածքային հիմնադրամի խորհրդատվական խորհրդի անդամ Մ. Նիկոլաս Ֆիրցլին դա անվանում է "մեծ ֆինանսական ճգնաժամ" եւ ասում, որ այն բացահայտում է բազմաթիվ զսպող ֆինանսական եւ աշխարհաքաղաքական դիսֆունկցիաներ:
{{quote|Մինչ այժմ, միակ եվրոպական երկրները, որ ստիպված են կարճաժամկետ վաճառքի արգելք սահմանել, Իտալիան է, Իսպանիան և Ֆրանիսան՝ ԵՄ չորս ամենախոշոր տնտեսություններից երեքը Ըստ նրա, Մադրիդի, Միլանի և Փարիզի ֆինանսական խոցելիությունը պայմանավորված է աշխարհատնտեսական իրադրության անտեսված լինելու հանգամանքով, ինչը առաջիկա օրերին առաջին պլան դուրս գալ: Ըստ ՏՀԶԿ ստանդարտների, Իսպանիան, Իտալիան և Ֆրանսիան ունեն շատ թույլ կենսաթոշակային ակտիվների բազա: Նրանց ընդհանուր կենսաթոշակային ունեցվածքը ավելի քան 15 անգամ ավելի քիչ է, քան Մեծ Բրիտանիայինը և Ավստրալիայինն է: Ինչպես այսօր, այնպես էլ ճգնաժամի ընթացքում նրանք ունեին կանխիկ դրամով հարուստ վերջնական սպառողների պակաս they lack cash-rich domestic buyers of last resort for the bonds and equities traded on their financial markets. Their national economies will suffer as a result, and their political [[sovereignty]] itself may be severely eroded."<ref name="euromoney_032020"/>}}
The [[OECD]] points out that businesses in many countries have become highly indebted, while the very low cost of borrowing and accommodative monetary policy have contributed to unprecedented corporate debt issuance.<ref name="oecd.org">{{Cite web|url=http://www.oecd.org/coronavirus/policy-responses/global-financial-markets-policy-responses-to-covid-19-2d98c7e0/#section-d1e53|title=Global financial markets policy responses to COVID-19|website=OECD|language=en|access-date=14 May 2020}}</ref>
Consequently, corporate debt stands at very high levels in many [[G20]] countries. Also, lower-rated credit issued in the form of BBB bonds, non-investment grade bonds, and leveraged loans has risen to elevated levels, the [[OECD]] warns, meaning businesses will have little choice but to reduce costs and employment to withstand insolvency pressures.<ref name="oecd.org" />
At the international and national levels, however—as [[Helmut Ettl]], head of the Austrian financial market authority, said—there is no reliable empirical data to gauge the ongoing effects of the [[Coronavirus disease 2019|COVID-19 disease]] on the economy and the environment, as this type of crisis is unprecedented. Companies that were already financially weak before the crisis are now further destabilized. All that is known, Ettl said, is that the crisis will be profound.<ref>[https://www.derstandard.at/story/2000116461884/fma-chef-ettl-den-absturz-der-wirtschaft-aufhalten Austrian Chief Financial Market Officer Ettl: "Stop the economic crash" (German) In Der Standard, 3 April 2020.]</ref>
== Stock market ==
{{Update section|date=April 2020}}{{main|2020 stock market crash}}
[[Պատկեր:DowJones2020crash.png|մինի|Movement of the [[Dow Jones Industrial Average]] between December 2019 and March 2020, showing the all-time high in February, and the crash in February and March during the COVID-19 pandemic]]
On Monday, 24 February 2020, the [[Dow Jones Industrial Average]] and [[FTSE 100]] dropped more than 3% as the coronavirus outbreak spread worsened substantially outside of China over the weekend.<ref name="B">{{Cite news|url=https://bbc.co.uk/news/business-51612520|title=Global stock markets plunge on coronavirus fears|work=BBC News|date=24 February 2020|access-date=25 February 2020|archive-url=https://web.archive.org/web/20200225014233/https://www.bbc.co.uk/news/business-51612520|archive-date=25 February 2020|url-status=live}}</ref> This follows benchmark [[Stock market index|indices]] falling sharply in continental Europe after steep declines across Asia.<ref>{{cite web|url=https://www.barrons.com/articles/the-dow-is-down-700-points-as-the-coronavirus-spreads-in-europe-51582548023|title=The Dow Is Down 700 Points as the Coronavirus Strikes in Italy|website=Barrons|publisher=Barrons|archive-url=https://web.archive.org/web/20200224141414/https://www.barrons.com/articles/the-dow-is-down-700-points-as-the-coronavirus-spreads-in-europe-51582548023|archive-date=24 February 2020|access-date=24 February 2020|url-status=live}}</ref><ref>{{cite web|url=https://www.wsj.com/articles/stocks-fall-as-coronavirus-spread-accelerates-outside-china-11582533308|title=Dow Industrials Drop 1,000 Points as Coronavirus Cases Mount Outside Asia|website=The Wall Street Journal|archive-url=https://web.archive.org/web/20200224092009/https://www.wsj.com/articles/stocks-fall-as-coronavirus-spread-accelerates-outside-china-11582533308|archive-date=24 February 2020|access-date=24 February 2020|url-status=live}}</ref> The DAX, CAC 40 and IBEX 35 each fell by about 4% and the FTSE MIB fell over 5%. There was a large fall in the price of oil and a large increase in the price of gold, to a 7-year high. On 27 February, due to mounting worries about the coronavirus outbreak, various U.S. stock market indices including the [[NASDAQ-100]], the [[S&P 500 Index]], and the [[Dow Jones Industrial Average]] posted their sharpest falls since 2008, with the [[List of largest daily changes in the Dow Jones Industrial Average|Dow falling 1,191 points, its largest one-day drop]] since the [[Financial crisis of 2007–08|2008 financial crisis]].<ref>{{Cite web|url=https://www.cnn.com/2020/02/27/investing/dow-stock-market-selloff/index.html|title=Dow falls 1,191 points – the most in history|last=Tappe|first=Anneken|date=27 February 2020|website=[[CNN Business]]|publisher=[[CNN]]|archive-url=https://web.archive.org/web/20200228000435/https://www.cnn.com/2020/02/27/investing/dow-stock-market-selloff/index.html|archive-date=28 February 2020|access-date=28 February 2020|url-status=live}}</ref><ref>{{Cite journal|last1=Zhang|first1=Dayong|last2=Hu|first2=Min|last3=Ji|first3=Qiang|date=16 April 2020|title=Financial markets under the global pandemic of COVID-19|journal=Finance Research Letters|language=en|volume=36|pages=101528|doi=10.1016/j.frl.2020.101528|issn=1544-6123|pmc=7160643|pmid=32837360}}</ref> On 28 February 2020, stock markets worldwide reported their largest single-week declines since the 2008 financial crisis.<ref name="CNBC">{{cite news|last1=Smith|first1=Elliot|title=Global stocks head for worst week since the financial crisis amid fears of a possible pandemic|date=28 February 2020|publisher=[[CNBC]]|url=https://www.cnbc.com/2020/02/28/global-stocks-head-for-worst-week-since-financial-crisis-on-coronavirus-fears.html|access-date=28 February 2020|archive-url=https://web.archive.org/web/20200228210138/https://www.cnbc.com/2020/02/28/global-stocks-head-for-worst-week-since-financial-crisis-on-coronavirus-fears.html|archive-date=28 February 2020|url-status=live}}</ref><ref name="cnbc.com">{{cite news|last1=Imbert|first1=Fred|last2=Huang|first2=Eustance|title=Dow falls 350 points Friday to cap the worst week for Wall Street since the financial crisis|date=27 February 2020|publisher=[[CNBC]]|url=https://www.cnbc.com/2020/02/27/dow-futures-fall-100-points-after-another-massive-rout-amid-coronavirus-fears.html|access-date=28 February 2020|archive-url=https://web.archive.org/web/20200228213917/https://www.cnbc.com/2020/02/27/dow-futures-fall-100-points-after-another-massive-rout-amid-coronavirus-fears.html|archive-date=28 February 2020|url-status=live}}</ref><ref name="European stocks fall 12% on the wee">{{cite news|last1=Smith|first1=Elliot|title=European stocks fall 12% on the week as coronavirus grips markets|date=28 February 2020|publisher=[[CNBC]]|url=https://www.cnbc.com/2020/02/28/europe-markets-coronavirus-hammers-global-stocks.html|access-date=28 February 2020|archive-url=https://web.archive.org/web/20200228210951/https://www.cnbc.com/2020/02/28/europe-markets-coronavirus-hammers-global-stocks.html|archive-date=28 February 2020|url-status=live}}</ref>
Following a second week of turbulence, on 6 March, stock markets worldwide closed down (although the Dow Jones Industrial Average, NASDAQ Composite, and S&P 500 closed up on the week),<ref>{{cite news|last1=Huang|first1=Eustance|title=Major Asian markets fall more than 2% to cap week of market gyrations|date=6 March 2020|publisher=[[CNBC]]|url=https://www.cnbc.com/2020/03/06/asia-markets-coronavirus-airline-stocks-currencies-in-focus.html|access-date=6 March 2020|archive-url=https://web.archive.org/web/20200306111941/https://www.cnbc.com/2020/03/06/asia-markets-coronavirus-airline-stocks-currencies-in-focus.html|archive-date=6 March 2020|url-status=live}}</ref><ref>{{cite news|last1=Smith|first1=Elliot|last2=Amaro|first2=Silvia|title=European stocks close 3.6% lower amid coronavirus volatility; oil sector down 5.5%|date=6 March 2020|publisher=[[CNBC]]|url=https://www.cnbc.com/2020/03/06/european-stocks-amid-coronavirus-volatility.html|access-date=6 March 2020|archive-url=https://web.archive.org/web/20200306100905/https://www.cnbc.com/2020/03/06/european-stocks-amid-coronavirus-volatility.html|archive-date=6 March 2020|url-status=live}}</ref><ref>{{cite news|last1=Li|first1=Yun|title=Dow falls 250 points, ekes out a small weekly gain after a wild run|date=6 March 2020|publisher=[[CNBC]]|url=https://www.cnbc.com/2020/03/06/us-markets-dow-futures-coronavirus-us-treasury-yields.html|access-date=6 March 2020|archive-url=https://web.archive.org/web/20200306053004/https://www.cnbc.com/2020/03/06/us-markets-dow-futures-coronavirus-us-treasury-yields.html|archive-date=6 March 2020|url-status=live}}</ref> while the yields on 10-year and 30-year U.S. Treasury securities fell to new record lows under 0.7% and 1.26% respectively.<ref>{{cite news|last1=Franck|first1=Thomas|title=10-year Treasury yield falls to new all-time low under 0.7% as flight to bonds continues|date=6 March 2020|publisher=[[CNBC]]|url=https://www.cnbc.com/2020/03/06/10-year-treasury-yield-falls-below-0point83percent-as-coronavirus-rocks-markets.html|access-date=6 March 2020|archive-url=https://web.archive.org/web/20200306074257/https://www.cnbc.com/2020/03/06/10-year-treasury-yield-falls-below-0point83percent-as-coronavirus-rocks-markets.html|archive-date=6 March 2020|url-status=live}}</ref> U.S. President [[Donald Trump]] signed into law an [[Coronavirus Preparedness and Response Supplemental Appropriations Act|emergency appropriations and pandemic countermeasures bill]] including $8.3 billion in government spending.<ref>{{cite news|last1=Borter|first1=Gabriella|last2=Gorman|first2=Steve|title=Coronavirus found on cruise ship as more U.S. states report cases|date=6 March 2020|agency=[[Reuters]]|url=https://www.reuters.com/article/us-health-coronavirus-usa/coronavirus-found-on-cruise-ship-as-more-u-s-states-report-cases-idUSKBN20T235|access-date=13 March 2020|archive-url=https://web.archive.org/web/20200310072232/https://www.reuters.com/article/us-health-coronavirus-usa/coronavirus-found-on-cruise-ship-as-more-u-s-states-report-cases-idUSKBN20T235|archive-date=10 March 2020|url-status=live}}</ref> After [[OPEC]] and Russia failed to agree on oil production cuts on 5 March and [[2020 Russia–Saudi Arabia oil price war|Saudi Arabia and Russia both announced increases in oil production on 7 March]], [[Price of oil|oil prices]] fell by 25 percent.<ref>{{cite news|last1=Stevens|first1=Pippa|last2=Meredith|first2=Sam|title=Oil plunges 10% for worst day in more than 5 years after OPEC+ fails to agree on a massive production cut|date=6 March 2020|publisher=[[CNBC]]|url=https://www.cnbc.com/2020/03/06/oil-sinks-5percent-to-multi-year-low-on-uncertain-opec-deal.html|access-date=9 March 2020|archive-url=https://web.archive.org/web/20200308230139/https://www.cnbc.com/2020/03/06/oil-sinks-5percent-to-multi-year-low-on-uncertain-opec-deal.html|archive-date=8 March 2020|url-status=live}}</ref><ref>{{cite news|last1=Kelly|first1=Stephanie|title=Oil plunges 25%, hit by erupting Saudi-Russia oil price war|date=8 March 2020|agency=[[Reuters]]|url=https://www.reuters.com/article/us-global-oil/oil-prices-plunge-hit-by-erupting-saudi-russia-oil-price-war-idUSKBN20V131|access-date=9 March 2020|archive-url=https://web.archive.org/web/20200309181433/https://www.reuters.com/article/us-global-oil/oil-prices-plunge-hit-by-erupting-saudi-russia-oil-price-war-idUSKBN20V131|archive-date=9 March 2020|url-status=live}}</ref> The role of cross-border flows of goods in the modern economy, driven by decades of falling transport costs, falling communication costs and, until recently, falling tariffs, also had a big role to play in impacting the stock market.<ref>{{Cite journal|last1=Baker|first1=Scott|last2=Bloom|first2=Nicholas|last3=Davis|first3=Steven|last4=Kost|first4=Kyle|last5=Sammon|first5=Marco|last6=Viratyosin|first6=Tasaneeya|date=April 2020|title=The Unprecedented Stock Market Impact of COVID-19|url=http://www.nber.org/papers/w26945.pdf|language=en|location=Cambridge, MA|pages=w26945|doi=10.3386/w26945|periodical=NBER Working Paper Series|s2cid=216259704|doi-access=free}}</ref>
Overall, stock markets declined over 30% by March; implied volatilities of [[equities]] and oil have spiked to crisis levels; and credit spreads on non-investment grade debt have widened sharply as investors reduce risks. This heightened turmoil in global financial markets is occurring despite the substantial and comprehensive financial reforms agreed by [[G20]] financial authorities in the post-crisis era.<ref>{{Cite web|url=http://www.oecd.org/coronavirus/policy-responses/global-financial-markets-policy-responses-to-covid-19-2d98c7e0/#section-d1e26|title=Global financial markets policy responses to COVID-19|website=OECD|language=en|access-date=14 May 2020}}</ref>
=== Week of 9 March 2020 ===
On the morning of 9 March, the S&P 500 fell 7% in four minutes after the exchange opened, triggering a [[Trading curb|circuit breaker]] for the first time since the [[financial crisis of 2007–08]] and halting trading for 15 minutes.<ref>{{cite news|last1=Ponczek|first1=Sarah|last2=Hajric|first2=Vildana|title=S&P 500 Plunges 7%, Triggering Market-Wide Stock Trading Halt|url=https://finance.yahoo.com/news/rout-u-stock-futures-trigger-221631295.html|access-date=9 March 2020|work=Bloomberg|date=9 March 2020|archive-url=https://web.archive.org/web/20200309035425/https://finance.yahoo.com/news/rout-u-stock-futures-trigger-221631295.html|archive-date=9 March 2020|url-status=live}}</ref> At the end of trading, stock markets worldwide saw massive declines (with the [[STOXX Europe 600]] [[Market trend#Bear market|falling to more than 20% below]] its [[Maxima and minima|peak]] earlier in the year),<ref>{{cite news|last1=Huang|first1=Eustance|title=Japan stocks drop 5%, China and Hong Kong shares plunge beyond 3% amid oil price war|date=8 March 2020|publisher=[[CNBC]]|url=https://www.cnbc.com/2020/03/09/asia-markets-oil-prices-coronavirus-currencies-in-focus.html|access-date=10 March 2020|archive-url=https://web.archive.org/web/20200309160717/https://www.cnbc.com/2020/03/09/asia-markets-oil-prices-coronavirus-currencies-in-focus.html|archive-date=9 March 2020|url-status=live}}</ref><ref>{{cite news|last1=Smith|first1=Elliot|last2=Ellyat|first2=Holly|title=European stocks close 7% lower and enter bear market territory as oil prices crash|date=9 March 2020|publisher=[[CNBC]]|url=https://www.cnbc.com/2020/03/09/european-markets-plunge-as-coronavirus-spreads-further-and-oil-slumps.html|access-date=10 March 2020|archive-url=https://web.archive.org/web/20200309160516/https://www.cnbc.com/2020/03/09/european-markets-plunge-as-coronavirus-spreads-further-and-oil-slumps.html|archive-date=9 March 2020|url-status=live}}</ref> with the Dow Jones Industrial Average eclipsing the previous one-day decline record on 27 February by falling 2,014 points (or 7.8%).<ref>{{cite news|last1=Li|first1=Yun|title=Dow sinks 2,000 points in worst day since 2008, S&P 500 drops more than 7%|date=9 March 2020|publisher=[[CNBC]]|url=https://www.cnbc.com/2020/03/08/dow-futures-drop-700-points-as-all-out-oil-price-war-adds-to-coronavirus-stress.html|access-date=10 March 2020|archive-url=https://web.archive.org/web/20200309155615/https://www.cnbc.com/2020/03/08/dow-futures-drop-700-points-as-all-out-oil-price-war-adds-to-coronavirus-stress.html|archive-date=9 March 2020|url-status=live}}</ref> The yield on 10-year and 30-year U.S. Treasury securities hit new record lows, with the 30-year securities falling below 1% for the first time in history.<ref>{{cite news|last1=Franck|first1=Thomas|last2=Li|first2=Yun|title=10-year Treasury yield hits new all-time low of 0.318% amid historic flight to bonds|date=8 March 2020|publisher=[[CNBC]]|url=https://www.cnbc.com/2020/03/09/10-year-treasury-yield-plunges.html|access-date=10 March 2020|archive-url=https://web.archive.org/web/20200309193520/https://www.cnbc.com/2020/03/09/10-year-treasury-yield-plunges.html|archive-date=9 March 2020|url-status=live}}</ref>
On 12 March, Asia-Pacific stock markets closed down (with the [[Nikkei 225]] of the [[Tokyo Stock Exchange]] also falling to more than 20% below its 52-week high),<ref>{{cite news|last=Huang|first=Eustance|title=Japan stocks follow Dow into a bear market as Trump suspends travel from Europe; WHO declares coronavirus outbreak a pandemic|date=11 March 2020|publisher=[[CNBC]]|url=https://www.cnbc.com/2020/03/12/asia-markets-dow-bear-market-coronavirus-currencies-in-focus.html|access-date=12 March 2020|archive-url=https://web.archive.org/web/20200312213734/https://www.cnbc.com/2020/03/12/asia-markets-dow-bear-market-coronavirus-currencies-in-focus.html|archive-date=12 March 2020|url-status=live}}</ref> European stock markets closed down 11% (their worst one-day decline in history),<ref>{{cite news|last1=Smith|first1=Elliot|last2=Ellyatt|first2=Holly|title=European stocks close 11% lower in worst one-day drop ever on coronavirus fears|date=12 March 2020|publisher=[[CNBC]]|url=https://www.cnbc.com/2020/03/12/europe-markets-poised-to-open-lower-after-trump-restricts-european-travel-to-us.html|access-date=12 March 2020|archive-url=https://web.archive.org/web/20200312213724/https://www.cnbc.com/2020/03/12/europe-markets-poised-to-open-lower-after-trump-restricts-european-travel-to-us.html|archive-date=12 March 2020|url-status=live}}</ref> while the Dow Jones Industrial Average closed down an additional 10% (eclipsing the one-day record set on 9 March), the NASDAQ Composite was down 9.4%, and the S&P 500 was down 9.5% (with the NASDAQ and S&P 500 also falling to more than 20% below their peaks), and the declines activated the trading curb at the [[New York Stock Exchange]] for the second time that week.<ref>{{cite news|last1=Imbert|first1=Fred|last2=Franck|first2=Thomas|title=Dow plunges 10% amid coronavirus fears for its worst day since the 1987 market crash|date=12 March 2020|publisher=[[CNBC]]|url=https://www.cnbc.com/2020/03/11/futures-are-steady-wednesday-night-after-dow-closes-in-bear-market-traders-await-trump.html|access-date=12 March 2020|archive-url=https://web.archive.org/web/20200312000949/https://www.cnbc.com/2020/03/11/futures-are-steady-wednesday-night-after-dow-closes-in-bear-market-traders-await-trump.html|archive-date=12 March 2020|url-status=live}}</ref><ref>{{cite news|last1=Culp|first1=Stephen|title=Wall Street plunges, bringing record bull run to an end|date=12 March 2020|agency=[[Reuters]]|url=https://www.reuters.com/article/us-usa-stocks/wall-street-plunges-bringing-record-bull-run-to-an-end-idUSKBN20Z0CM|access-date=12 March 2020}}</ref> Oil prices dropped by 8%,<ref>{{cite news|last1=Stevens|first1=Pippa|title=Oil drops as much as 8%, on pace for worst week in more than a decade|date=12 March 2020|publisher=[[CNBC]]|url=https://www.cnbc.com/2020/03/12/oil-drops-as-much-as-8percent-on-pace-for-worst-week-in-more-than-a-decade.html|access-date=12 March 2020|archive-url=https://web.archive.org/web/20200312213750/https://www.cnbc.com/2020/03/12/oil-drops-as-much-as-8percent-on-pace-for-worst-week-in-more-than-a-decade.html|archive-date=12 March 2020|url-status=live}}</ref> while the yields on 10-year and 30-year U.S. Treasury securities increased to 0.86% and 1.45% (and their [[yield curve]] finished [[Yield curve#Normal yield curve|normal]]).<ref>{{cite news|last1=Smith|first1=Elliot|last2=Li|first2=Yun|title=10-year Treasury yield rises even as stocks tumble into bear market|date=12 March 2020|publisher=[[CNBC]]|url=https://www.cnbc.com/2020/03/12/treasury-yields-fall-as-dow-slides-into-bear-market.html|access-date=12 March 2020|archive-url=https://web.archive.org/web/20200312213804/https://www.cnbc.com/2020/03/12/treasury-yields-fall-as-dow-slides-into-bear-market.html|archive-date=12 March 2020|url-status=live}}</ref> On 15 March, the Fed cut its benchmark interest rate by a full percentage point, to a target range of 0 to 0.25%. However, in response, futures on the S&P 500 and crude oil dropped on continued market worries.<ref name="NYT_150320">{{cite web|url=https://www.nytimes.com/2020/03/15/business/stock-market-today-coronavirus.html|title=Fed Cuts Interest Rates in Bid to Protect Economy: Live Updates|date=16 March 2020|website=The New York Times|archive-url=https://web.archive.org/web/20200316004742/https://www.nytimes.com/2020/03/15/business/stock-market-today-coronavirus.html|archive-date=16 March 2020|access-date=16 March 2020|url-status=live}}</ref> Almost 75% of the hedge funds suffered steep losses during this timeline.<ref>{{cite news|author1=Bei Hu|author2=Nishant Kumar|title=Hedge Fund Hotshots Suffer Humbling Losses in Coronavirus Chaos|url=https://www.bloomberg.com/news/articles/2020-04-16/hedge-fund-hotshots-suffer-humbling-losses-in-coronavirus-chaos|access-date=30 May 2020|work=Bloomberg News|date=16 April 2020|language=en}}</ref>
== Oil prices ==
{{See also|2020 Russia–Saudi Arabia oil price war}}The [[COVID-19 pandemic]] and related confinement measures caused an unprecedented contraction in economic activity and a collapse in demand for oil and oil products. The result is one of the biggest price shocks the energy market experienced since the first oil shock of 1973. Oil prices dipped below US$20 ([[Brent Crude]]) a barrel, losing nearly 70% in value, with storage capacity approaching its limits (OilPrice).<ref>{{Cite web|url=http://www.oecd.org/coronavirus/policy-responses/covid-19-crisis-response-in-mena-countries-4b366396/#section-d1e193|title=COVID-19 crisis response in MENA countries|website=OECD|language=en|access-date=14 May 2020}}</ref>
[[Պատկեր:WTI_price_2019-2020.png|աջից|մինի|Movement of [[West Texas Intermediate|WTI]] price from 2019. The crash started in mid-February 2020. On 20 April 2020, prices dropped below zero for the first time in history.<ref name="FT_Apr20">{{cite news|last1=Sheppard|first1=David|last2=McCormick|first2=Myles|last3=Brower|first3=Derek|last4=Lockett|first4=Hudson|title=US oil price below zero for first time in history|url=https://www.ft.com/content/a5292644-958d-4065-92e8-ace55d766654|access-date=20 April 2020|work=Financial Times|date=20 April 2020}}</ref><ref name="WP_Apr20">{{cite web|url=https://www.washingtonpost.com/business/2020/04/20/oil-barrel-below-zero/|title=Oil drops below $0, signaling extreme collapse in demand. But you're still going to have to pay for gas.|last1=Englund|first1=Will|date=20 April 2020|website=The Washington Post|language=en|access-date=20 April 2020}}</ref>]]
[[Պատկեր:U.S._motor_gasoline_product_supplied_(49784554532).png|մինի|Demand for motor gasoline fell sharply in the United States]]
The reduction in the [[demand]] for travel and the lack of factory activity due to the outbreak significantly impacted demand for oil, causing its price to fall.<ref>{{cite news|title=Oil prices fall as coronavirus spreads outside China|url=https://apnews.com/6449ec1c2eb460366853dd3e799dd877|access-date=9 March 2020|agency=[[Associated Press]]|date=29 February 2020|archive-url=https://web.archive.org/web/20200308175452/https://apnews.com/6449ec1c2eb460366853dd3e799dd877|archive-date=8 March 2020|url-status=live}}</ref> In mid-February, the [[International Energy Agency]] forecasted that oil demand growth in 2020 would be the smallest since 2011.<ref>{{cite news|title=Coronavirus set to knock oil demand growth to slowest since 2011|url=https://www.ft.com/content/babdb1ba-4e3b-11ea-95a0-43d18ec715f5|access-date=9 March 2020|work=[[Financial Times]]|date=13 February 2020|archive-url=https://web.archive.org/web/20200214140259/https://www.ft.com/content/babdb1ba-4e3b-11ea-95a0-43d18ec715f5|archive-date=14 February 2020|url-status=live}}</ref> Chinese demand slump resulted in a meeting of the [[Organization of Petroleum Exporting Countries]] (OPEC) to discuss a potential cut in production to balance the loss in demand.<ref>{{cite news|last1=Kollewe|first1=Julia|title=Opec discusses coronavirus as Chinese oil demand slumps – as it happened|url=https://www.theguardian.com/business/live/2020/feb/04/opec-to-discuss-coronavirus-as-chinese-oil-demand-slumps-business-live|access-date=9 March 2020|work=The Guardian|date=4 February 2020|archive-url=https://web.archive.org/web/20200206095240/https://www.theguardian.com/business/live/2020/feb/04/opec-to-discuss-coronavirus-as-chinese-oil-demand-slumps-business-live|archive-date=6 February 2020|url-status=live}}</ref> The cartel initially made a tentative agreement to cut oil production by 1.5 million barrels per day (bpd) following a meeting in Vienna on 5 March 2020, which would bring the production levels to the lowest it has been since the [[Iraq War]]. Meanwhile, analytics firm [[IHS Markit]] predicted a fall global demand for crude to fall by 3.8 million bpd in the first quarter of 2020, largely due to the halt to Chinese economic activity due to the virus; it also predicted the first annual reduction in demand for crude since the [[financial crisis of 2007–08]].<ref>{{cite news|last1=Johnson|first1=Keith|title=OPEC Tries to Forestall a Coronavirus Oil Collapse|url=https://foreignpolicy.com/2020/03/05/opec-tries-forestall-coronavirus-oil-collapse-crude-prices/|access-date=9 March 2020|work=[[Foreign Policy (magazine)|Foreign Policy]]|date=5 March 2020|archive-url=https://web.archive.org/web/20200307041622/https://foreignpolicy.com/2020/03/05/opec-tries-forestall-coronavirus-oil-collapse-crude-prices/|archive-date=7 March 2020|url-status=live}}</ref>
However, Russia refused to cooperate with the OPEC cuts, effectively ending the agreement it has maintained with OPEC since 2016. Russia balked as it believed that the growth of [[shale oil]] extraction in the U.S., which was not party to any agreement with OPEC, would require continued cuts for the foreseeable future. Reduced prices would also damage the U.S. shale industry by forcing prices below operating costs for many shale producers, and thus retaliate for the damage inflicted on Russian and OPEC finances. The breakdown in talks also resulted in a failure to extend the cut in output of 2.1 million bpd that was scheduled to expire at the end of March.<ref>{{cite web|url=https://www.nytimes.com/2020/03/09/business/energy-environment/oil-opec-saudi-russia.html|title=How a Saudi-Russian Standoff Sent Oil Markets Into a Frenzy|last1=Reed|first1=Stanley|date=9 March 2020|website=The New York Times|archive-url=https://web.archive.org/web/20200310001808/https://www.nytimes.com/2020/03/09/business/energy-environment/oil-opec-saudi-russia.html|archive-date=10 March 2020|access-date=10 March 2020|url-status=live}}</ref>
On 8 March 2020, Saudi Arabia unexpectedly announced that it would instead increase production of crude oil and sell it at a discount (of $6–8 a barrel) to customers in Asia, the US and Europe, following the breakdown of negotiations. Prior to the announcement, the price of oil had fallen by more than 30% since the start of the year, and upon Saudi Arabia's announcement it dropped a further 30 percent, though later recovered somewhat.<ref>{{cite news|last1=Stevens|first1=Pippa|title=Oil prices plunge as much as 30% after OPEC deal failure sparks price war|url=https://www.cnbc.com/2020/03/08/oil-plummets-30percent-as-opec-deal-failure-sparks-price-war-fears.html|access-date=9 March 2020|publisher=CNBC|date=8 March 2020|language=en|archive-url=https://web.archive.org/web/20200309000012/https://www.cnbc.com/2020/03/08/oil-plummets-30percent-as-opec-deal-failure-sparks-price-war-fears.html|archive-date=9 March 2020|url-status=live}}</ref><ref>{{cite news|title=Oil Prices, Stocks Plunge After Saudi Arabia Stuns World With Massive Discounts|url=https://www.npr.org/2020/03/08/813439501/saudi-arabia-stuns-world-with-massive-discount-in-oil-sold-to-asia-europe-and-u-?t=1583756267642|access-date=9 March 2020|publisher=[[National Public Radio|NPR]]|date=8 March 2020|archive-url=https://web.archive.org/web/20200310003246/https://www.npr.org/2020/03/08/813439501/saudi-arabia-stuns-world-with-massive-discount-in-oil-sold-to-asia-europe-and-u-?t=1583756267642|archive-date=10 March 2020|url-status=live}}</ref> [[Brent Crude]], used to price two-thirds of the world's crude oil supplies, experienced the largest drop since the 1991 [[Gulf War]] on the night of 8 March. Also, the price of [[West Texas Intermediate]] fell to its lowest level since February 2016.<ref>{{cite web|url=https://www.washingtonpost.com/business/2020/03/08/saudi-arabia-flooding-market-with-oil-prompting-predictions-further-decline-monday/|title=U.S. markets crater with stocks down more than 5 percent as coronavirus spreads|last1=Telford|first1=Taylor|last2=Englund|first2=Will|website=The Washington Post|language=en|archive-url=https://web.archive.org/web/20200308232006/https://www.washingtonpost.com/business/2020/03/08/saudi-arabia-flooding-market-with-oil-prompting-predictions-further-decline-monday/|archive-date=8 March 2020|last3=Heath|first3=Thomas|access-date=9 March 2020|url-status=live}}</ref> Fears of the Russian–Saudi Arabian oil price war caused a plunge in U.S. stocks, and have a particular impact on American producers of [[shale oil]].<ref>{{cite news|last1=Egan|first1=Matt|title=Oil crashes by most since 1991 as Saudi Arabia launches price war|url=https://edition.cnn.com/2020/03/08/investing/oil-prices-crash-opec-russia-saudi-arabia/index.html|access-date=9 March 2020|publisher=CNN|date=9 March 2020|archive-url=https://web.archive.org/web/20200309003756/https://edition.cnn.com/2020/03/08/investing/oil-prices-crash-opec-russia-saudi-arabia/index.html|archive-date=9 March 2020|url-status=live}}</ref> On 13 March, oil prices posted their largest single-week decline since 2008.<ref name="CNBC Oil 3-13-2020">{{cite news|title=Oil posts biggest weekly loss since 2008|date=13 March 2020|publisher=[[CNBC]]|url=https://www.cnbc.com/2020/03/13/oil-markets-coronavirus-brent-crude-futures-in-focus.html|access-date=13 March 2020|archive-url=https://web.archive.org/web/20200313223242/https://www.cnbc.com/2020/03/13/oil-markets-coronavirus-brent-crude-futures-in-focus.html|archive-date=13 March 2020|url-status=live}}</ref>
Plans announced on 13 March 2020 by U.S. President [[Donald Trump]] that he was directing the [[United States Department of Energy|U.S. Department of Energy]] to purchase oil for the [[Strategic Petroleum Reserve (United States)|U.S. Strategic Petroleum Reserve]] were suspended less than two weeks later when funding for the purchase was not provided by Congress.<ref>{{cite news|last1=Franck|first1=Thomas|title=Trump to buy oil for strategic reserve to aid energy industry: 'We're going to fill it'|date=13 March 2020|publisher=[[CNBC]]|url=https://www.cnbc.com/2020/03/13/trump-asks-energy-department-to-purchase-oil-for-the-strategic-petroleum-reserve.html|access-date=13 March 2020|archive-url=https://web.archive.org/web/20200313204941/https://www.cnbc.com/2020/03/13/trump-asks-energy-department-to-purchase-oil-for-the-strategic-petroleum-reserve.html|archive-date=13 March 2020|url-status=live}}</ref> This would have allowed the purchase of up to 92 million barrels. At the time, the Reserve held 635 million barrels with a capacity of 727 million. ''The Washington Post'' characterized this as "bail[ing] out domestic oil companies", though the effect on prices was expected to be minor in a 100 million barrel per day market.<ref>{{cite web|url=https://www.washingtonpost.com/climate-environment/2020/03/13/trump-oil-strategic-reserve/|title=Fill 'er up: Trump to buy oil to fill the Strategic Petroleum Reserve — and help companies|last1=Mufson|first1=Steven|date=13 March 2020|website=The Washington Post|language=en|archive-url=https://web.archive.org/web/20200314003512/https://www.washingtonpost.com/climate-environment/2020/03/13/trump-oil-strategic-reserve/|archive-date=14 March 2020|access-date=13 March 2020|url-status=live}}</ref>
In sharp contrast to US inaction, Australia announced on 22 April it would take advantage of the lowest oil prices in 21 years to build a fuel reserve by purchasing $60 million worth of crude and storing it in the US SPR.{{citation needed|date=May 2020}}
[[Goldman Sachs]] predicted on 14 March that one-third of oil and oil service companies in the U.S. would be bought by competitors or driven out of business by the low crude prices.<ref name="WaPo_140320">{{cite web|url=https://www.washingtonpost.com/business/2020/03/14/recession-economy-coronavirus-jobs/|title=With unprecedented force and speed, a global recession is likely taking hold|last1=Lynch|first1=David J.|last2=Long|first2=Heather|date=14 March 2020|website=The Washington Post|language=en|archive-url=https://web.archive.org/web/20200315040218/https://www.washingtonpost.com/business/2020/03/14/recession-economy-coronavirus-jobs/|archive-date=15 March 2020|access-date=15 March 2020|url-status=live}}</ref> Oil companies that filed for bankruptcy during the pandemic include [[Whiting Petroleum Corporation|Whiting Petroleum]] (on 1 April) and [[Diamond Offshore Drilling|Diamond Offshore]] (on 27 April).<ref>{{Cite web|url=https://www.cnn.com/2020/04/27/investing/diamond-offshore-oil-company-files-bankruptcy/index.html|title=Oil company Diamond Offshore files for bankruptcy|last=Isidore|first=Chris|date=27 April 2020|publisher=CNN|access-date=27 April 2020}}</ref>
On Thursday, 9 April, [[OPEC]], Russia and other producers tentatively agreed to the biggest oil production cuts in history. They decided to withdraw 10 million barrels per day or 10% of global production from the market for the months of May and June, a step further supported by G20 Energy Ministers.<ref>{{Cite web|url=http://www.oecd.org/coronavirus/policy-responses/covid-19-crisis-response-in-mena-countries-4b366396/#figure-d1e209|title=COVID-19 crisis response in MENA countries|website=OECD|language=en|access-date=14 May 2020}}</ref>
In March 2021, the oil prices ascended as high as $71.38 a barrel. It was for the first time since 8 January 2020, the beginning of the [[COVID-19 pandemic]].<ref>{{cite web|url=https://www.reuters.com/article/us-global-oil/brent-hits-70-for-first-time-since-pandemic-began-after-saudi-attack-idUSKBN2B001J?rpc=401&|title=Brent hits $70 for first time since pandemic began after Saudi attack|access-date=7 March 2021|agency=Reuters}}</ref> The oil prices climbed up after the [[Houthi rebels]] of Yemen attacked the [[Aramco]] oil facility of Saudi Arabia using missiles and drones.<ref>{{cite web|url=https://www.washingtonpost.com/world/the_americas/saudi-houthi-attack-ras-tanura-aramco/2021/03/07/77f29148-7f72-11eb-9ca6-54e187ee4939_story.html|title=Houthis strike Saudi oil giant's facilities in the kingdom's east|website=The Washington Post|access-date=7 March 2021}}</ref>
=== Negative WTI futures (20 April 2020) ===
[[Պատկեր:Selected_North_American_crude_oil_prices_March_1_through_May_13,_2020_(49941454556).png|մինի|Oil prices for selected North American [[Benchmark (crude oil)|benchmarks]] in the spring of 2020]]
On 20 April 2020, the [[Futures contract|futures]] price of West Texas Intermediate crude to be delivered in May became negative, an unprecedented event. This was a result of uninterrupted supply and a much reduced demand, as oil storage facilities reaching their maximum capacity. Analyst characterized the event as an anomaly of the closing of the May futures market coupled with the lack of available storage in that time frame. The two previous inflation-adjusted low points for oil are $6 in 1931 during the [[Great Depression]] and [[Texas oil boom]]; and $2.50 in January and February 1862 during the [[American Civil War]] and [[Pennsylvania oil rush]].<ref name="WP_Apr20" /><ref name="FT_Apr20" /> WTI futures for May delivery recovered on the last day of trading, 21 April, ending at $10.01 a barrel. However, that day, Brent crude futures for June delivery fell 24% to $19.33 a barrel,<ref name="Reuters_210420">{{cite web|url=https://www.reuters.com/article/us-global-oil/u-s-crude-futures-turn-positive-after-historic-slide-brent-dips-idUSKBN22230I|title=Brent oil futures plunge as growing glut feeds market panic|last1=DiSavino|first1=Scott|date=21 April 2020|language=en|agency=Reuters|access-date=21 April 2020}}</ref> the lowest level since 2002,<ref>{{cite web|url=https://www.msn.com/en-us/money/markets/oil-market-trading-in-negative-territory-after-record-crash/ar-BB12WrWc|title=Oil Market Trading in Negative Territory After Record Crash|last1=Sundria|first1=Saket|last2=Longley|first2=Alex|date=21 April 2020|website=Bloomberg News|access-date=21 April 2020}}</ref> while WTI June futures fell 43% to $11.57 a barrel. More than two million futures contracts were traded on 21 April, a new record. Oil industry analysts were pessimistic about near-term stability in the market; an analyst for the broker [[OANDA]] stated, "There is nothing to make energy traders believe that storage constraints, rising inventories, and demand concerns will be alleviated."<ref name="Reuters_210420" />
The finances of many [[List of countries by oil production|oil-producing nations]] suffered severe stress. Iraq, which gets 90% of its budget from oil revenue and could profitably extract oil as long as it was above $60 a barrel, announced that it would have a $4.5 billion monthly shortfall starting in May. Other oil exporters – including Mexico, Venezuela, Ecuador, and Nigeria – are expected to contract economically or struggle to manage the fiscal fallout. Countries such as Saudi Arabia and Russia have cash reserves measured in years, but their leadership remain concerned.<ref>{{cite web|url=https://www.nytimes.com/2020/04/22/world/middleeast/oil-price-collapse-coronavirus.html|title=Oil Collapse and Covid-19 Create Toxic Geopolitical Stew|last1=Gladstone|first1=Rick|date=22 April 2020|website=The New York Times|access-date=22 April 2020}}</ref>
== Bond and debt markets ==
{{further|Corporate debt bubble}}Prior to the coronavirus pandemic, a massive amount of borrowing by firms with ratings just above "[[High-yield debt|junk]]", coupled with the growth of leveraged loans, which are made to companies with significant amount of debt, created a vulnerability in the financial system. The collapse of this [[corporate debt bubble]] would potentially endanger the solvency of firms, potentially worsening the next [[recession]]. In January, new U.S. corporate debt fell 10% from the previous year, potentially indicating more caution from investors.<ref name="WaPo100320">{{cite web|url=https://www.washingtonpost.com/business/2020/03/10/coronavirus-markets-economy-corporate-debt/|title=Fears of corporate debt bomb grow as coronavirus outbreak worsens|last1=Lynch|first1=David J.|date=10 March 2020|website=The Washington Post|language=en|archive-url=https://web.archive.org/web/20200311001048/https://www.washingtonpost.com/business/2020/03/10/coronavirus-markets-economy-corporate-debt/|archive-date=11 March 2020|access-date=11 March 2020|url-status=live}}</ref> As the economic impact of the coronavirus began to be felt, numerous financial news sources warned of the potential cascade of impacts upon the outstanding $10 trillion in corporate debt.<ref name="AP_120320">{{cite web|url=https://apnews.com/7cd0108d79c6b4f1ee2e6ec5fc3a2275|title=Corporate debt loads a rising risk as virus hits economy|last1=Wiseman|first1=Paul|last2=Condon|first2=Bernard|date=11 March 2020|website=AP News|archive-url=https://web.archive.org/web/20200312050042/https://apnews.com/7cd0108d79c6b4f1ee2e6ec5fc3a2275|archive-date=12 March 2020|last3=Bussewitz|first3=Cathy|access-date=12 March 2020|url-status=live}}</ref><ref>{{cite web|url=https://www.msn.com/en-gb/finance/other/the-c2-a315trillion-corporate-debt-time-bomb-global-economy-at-risk-from-the-bond-market-as-virus-spreads/ar-BB110Qnj|title=The £15trillion corporate debt time bomb: Global economy at risk from the bond market as virus spreads|last1=Oliver|first1=Matt|date=10 March 2020|publisher=MSN|access-date=11 March 2020}}</ref> Between mid-February and early March, investors increased the premium, or additional yield, to hold junk bonds by four times the premium demanded of higher credit lenders, indicating increased wariness.<ref name="WaPo100320" />
During the [[2020 stock market crash]] that began the week of 9 March, bond prices unexpectedly moved in the same direction as stock prices. Bonds are generally considered safer than stocks, so confident investors will sell bonds to buy stocks and cautious investors will sell stocks to buy bonds. Along with the unexpected movement of bonds in concert with stocks, bond desks reported that it had become difficult to trade many different types of bonds, including [[Municipal bond|municipal bonds]], [[Corporate bond|corporate bonds]], and even U.S. [[Treasury bond|Treasury bonds]]. ''[[The New York Times]]'' opined that this, coupled with the fall in gold futures, indicated that major investors were experiencing a cash crunch and were attempting to sell any asset they could.<ref>{{cite web|url=https://www.nytimes.com/2020/03/12/upshot/markets-weird-coronavirus.html|title=Something Weird Is Happening on Wall Street, and Not Just the Stock Sell-Off|last1=Irwin|first1=Neil|date=12 March 2020|website=The New York Times|archive-url=https://web.archive.org/web/20200312235458/https://www.nytimes.com/2020/03/12/upshot/markets-weird-coronavirus.html|archive-date=12 March 2020|access-date=13 March 2020|url-status=live}}</ref> As big investors sought to sell, the spread between the prices sellers and buyers wanted has widened. As banks were unable to sell the bonds they were holding, they also stopped buying bonds. As the number of traders fell, the few trades remaining wildly swung the bond prices. [[Market depth]] in Treasuries, a measure of liquidity, fell to its lowest level since the 2008 crisis.<ref>{{cite web|url=https://www.nytimes.com/2020/03/12/business/economy/wall-street-funding-troubles-fed.html|title=Troubles Percolate in the Plumbing of Wall Street|last1=Smialek|first1=Jeanna|last2=Phillips|first2=Matt|date=12 March 2020|website=The New York Times|archive-url=https://web.archive.org/web/20200314194742/https://www.nytimes.com/2020/03/12/business/economy/wall-street-funding-troubles-fed.html|archive-date=14 March 2020|access-date=15 March 2020|url-status=live}}</ref> Over the week of 9 March, investors pulled a weekly record of $15.9 billion from investment-grade bond funds, as well as $11.2 billion from high-yield bond funds, the second-highest on record.<ref name="MarketWatch_130320">{{cite web|url=https://www.marketwatch.com/story/wall-street-fear-flashbacks-to-2008-of-forced-selling-in-9-trillion-us-corporate-bond-market-2020-03-14|title=Wall Street fears 'flashbacks to 2008' with forced selling in $9 trillion U.S. corporate bond market|last1=Oh|first1=Sunny|date=14 March 2020|website=MarketWatch|access-date=15 March 2020}}</ref> Also, prices for bond exchange-traded funds began dropping below their net asset values.<ref>{{Cite web|url=https://www.morningstar.com/articles/976094/are-bond-funds-broken-as-diversifiers|title=Are Bond Funds 'Broken' as Diversifiers?|last=Benz|first=Christine|date=2 April 2020|website=Morningstar.com|access-date=19 May 2020}}</ref>
On 12 March, the U.S. Fed took almost unprecedented action to, in its words, "address highly unusual disruptions in Treasury financing markets associated with the coronavirus outbreak".<ref>{{cite web|url=https://www.newyorkfed.org/markets/opolicy/operating_policy_200312a|title=Statement Regarding Treasury Reserve Management Purchases and Repurchase Operations|date=12 March 2020|website=Federal Reserve Bank of New York|archive-url=https://web.archive.org/web/20200313003938/https://www.newyorkfed.org/markets/opolicy/operating_policy_200312a|archive-date=13 March 2020|access-date=13 March 2020|url-status=live}}</ref> The [[Federal Reserve Bank of New York]] announced that it would offer $1.5 trillion in [[Repurchase agreement|repurchase agreements]] in [[U.S. Treasury securities]] to smooth the functioning of the short-term market that banks use to lend to each other. The New York Fed further announced that it would buy $60 billion of Treasury bonds over the next month to keep the bond market functioning. The seizing up of markets was a critical step in the [[subprime mortgage crisis]] that led to the [[financial crisis of 2007–08]] and the Fed appeared to want to act quickly.<ref>{{cite web|url=https://www.washingtonpost.com/us-policy/2020/03/12/markets-stocks-today-coronavirus/|title=U.S. stock market suffers worst crash since 1987, as Americans wake up to a new normal of life|last1=Lynch|first1=David J.|last2=Heath|first2=Thomas|date=12 March 2020|website=The Washington Post|language=en|archive-url=https://web.archive.org/web/20200313110620/https://www.washingtonpost.com/us-policy/2020/03/12/markets-stocks-today-coronavirus/|archive-date=13 March 2020|last3=Telford|first3=Taylor|last4=Long|first4=Heather|access-date=13 March 2020|url-status=live}}</ref> On 15 March, as well as dropping interest rates, announced it would buy at least $500 billion in Treasures and at least $200 billion in government-backed mortgage securities over the next few months.<ref name="NYT_150320" /> On 16 March, as the stock market plunged, bond prices jumped according to their historical inverse relationship.<ref>{{cite web|url=https://www.nytimes.com/2020/03/16/business/stock-market-today-coronavirus.html?action=click&module=Spotlight&pgtype=Homepage#link-7b94b9d8|title=Stocks Drop as Grim Economic Outlook Grips Markets: Live Updates|date=16 March 2020|website=The New York Times|access-date=16 March 2020}}</ref>
On 17 March, the Fed announced that they would use the [[Commercial Paper Funding Facility]] (CPFF). The CPFF was first used in the 2007–08 financial crisis to buy about $350 billion of [[commercial paper]] (CP), thereby increasing the amount of cash in the CP market, used by business to pay bills and other short-term demands. CP most directly affects the mortgage and auto loan markets, as well as credit to small and medium-sized businesses. The [[United States Department of the Treasury|U.S. Treasury Department]] authorized $10 billion to backstop any losses incurred by the Fed using the Treasury's [[Exchange Stabilization Fund]]. U.S. stock markets rallied on the news.<ref>{{cite web|url=https://www.washingtonpost.com/business/2020/03/17/federal-reserve-launches-10-billion-special-fund-keep-credit-flowing-us-economy/|title=Federal Reserve launches special fund to keep credit flowing in U.S. economy during coronavirus scare|last1=Long|first1=Heather|date=17 March 2020|website=The Washington Post|language=en|archive-url=https://web.archive.org/web/20200317174732/https://www.washingtonpost.com/business/2020/03/17/federal-reserve-launches-10-billion-special-fund-keep-credit-flowing-us-economy/|archive-date=17 March 2020|access-date=17 March 2020|url-status=live}}</ref><ref>{{cite web|url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20200317a.htm|title=Federal Reserve Board announces establishment of a Commercial Paper Funding Facility (CPFF) to support the flow of credit to households and businesses|date=17 March 2020|website=[[Federal Reserve Board of Governors]]|language=en|archive-url=https://web.archive.org/web/20200317202006/https://www.federalreserve.gov/newsevents/pressreleases/monetary20200317a.htm|archive-date=17 March 2020|quote=By eliminating much of the risk that eligible issuers will not be able to repay investors by rolling over their maturing commercial paper obligations, this facility should encourage investors to once again engage in term lending in the commercial paper market. An improved commercial paper market will enhance the ability of businesses to maintain employment and investment as the nation deals with the coronavirus outbreak.|access-date=17 March 2020|url-status=live}}</ref>
On 19 March, the [[European Central Bank]] announced a 750 billion euro ($820 billion) bond-buying program, named the [[Pandemic Emergency Purchase Programme]], to mitigate market turmoil. Unlike in previous ECB asset-purchases, Greek government bonds were included. Markets reacted positively, with the yield on Italian government bonds dropping to 1.542% from 2.5% the day before.<ref>{{cite web|url=https://www.cnbc.com/2020/03/19/ecb-launches-new-820-billion-coronavirus-package.html|title=Italian borrowing costs fall sharply as ECB launches $820 billion coronavirus package|last1=Amaro|first1=Silvia|date=19 March 2020|publisher=CNBC|language=en|archive-url=https://web.archive.org/web/20200319084734/https://www.cnbc.com/2020/03/19/ecb-launches-new-820-billion-coronavirus-package.html|archive-date=19 March 2020|access-date=19 March 2020|url-status=live}}</ref><ref>{{cite journal|last1=Bank|first1=European Central|date=18 March 2020|title=ECB announces €750 billion Pandemic Emergency Purchase Programme (PEPP)|url=https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200318_1~3949d6f266.en.html|journal=European Central Bank|language=en|archive-url=https://web.archive.org/web/20200319074257/https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200318_1~3949d6f266.en.html|archive-date=19 March 2020|access-date=19 March 2020|url-status=live}}</ref>
In the week of 23 March, investors attracted by Fed guarantees of market liquidity and comparatively high bond yields rushed into the U.S. corporate debt market.<ref>{{cite web|url=https://www.cnbc.com/2020/04/03/coronavirus-stock-market-bond-etfs-for-the-search-for-yield.html|title=Investors searching for yield should opt for this part of the bond market, market analyst says|last1=Gurdus|first1=Lizzy|date=4 April 2020|publisher=CNBC|language=en|access-date=7 April 2020}}</ref><ref>{{cite web|url=https://www.barrons.com/articles/big-luckin-coffee-investor-sells-entire-stake-in-chinese-starbucks-rival-51586257245|title=Panic in Corporate Debt Markets Seems to Be Over— For Now|last1=Scaggs|first1=Alexandra|date=3 April 2020|website=Barron's|access-date=7 April 2020}}</ref> Investment-grade firms issued $73 billion in debt, about 21% more than the previous weekly record. Many U.S. firms sold debt in an attempt to build cash reserves in anticipation of future financial strain.<ref name="WSJ_200420">{{cite web|url=https://www.wsj.com/articles/stock-investors-buy-into-corporate-bond-surge-11585585858|title=Stock Investors Buy Into Corporate Bond Surge|last1=Wirz|first1=Matt|date=30 March 2020|website=The Wall Street Journal|access-date=2 April 2020}}</ref>
Meanwhile, Chinese corporate bond defaults fell 30% in the first quarter, year on year, as the Chinese government directed banks to supply loans to corporations to avoid defaults and job losses.<ref>{{cite web|url=https://asia.nikkei.com/Business/Business-trends/Chinese-corporate-bond-defaults-drop-30-on-bank-aid|title=Chinese corporate bond defaults drop 30% on bank aid|last1=Cho|first1=Yusho|date=7 April 2020|website=Nikkei Asian Review|access-date=20 April 2020}}</ref> Interest rates in China fell to a 14-year low due to government efforts.<ref>{{cite web|url=https://finance.yahoo.com/news/china-corporate-deleveraging-campaign-may-160001846.html|title=China Corporate Deleveraging Push May Be on Hold for Years|date=29 March 2020|website=Bloomberg|access-date=16 April 2020}}</ref>
On 30 March, Moody's downgraded the outlook on U.S. corporate debt from 'stable' to 'negative,' focusing in particular on the global air travel, lodging and cruise ships, automobiles, oil and gas, and the banking sectors.<ref>{{cite web|url=https://www.cnbc.com/2020/03/30/moodys-cuts-outlook-on-6point6-trillion-us-corporate-debt-pile-to-negative.html|title=Moody's cuts outlook on $6.6 trillion US corporate debt pile to 'negative'|last1=Cox|first1=Jeff|date=30 March 2020|publisher=CNBC|language=en|access-date=2 April 2020}}</ref> Fitch forecast a doubling of defaults on U.S. leverage debt from 3% in 2019 to 5–6% in 2020, with a default rate up to 20% for retail and energy companies.<ref>{{cite web|url=https://theconversation.com/corporate-debt-is-in-serious-trouble-heres-what-it-means-if-the-market-collapses-135371|title=Corporate debt is in serious trouble – here's what it means if the market collapses|last1=Frank|first1=Jefferson|date=3 April 2020|website=The Conversation|language=en|access-date=7 April 2020}}</ref>
=== April 2020 ===
In South Korea, the first on-shore debt offering in three weeks was successful on 9 April. However, the yields on [[South Korean won|won]]-denominated debt remained high amidst general pessimism about the economic outlook during the pandemic.<ref>{{cite web|url=https://finance.yahoo.com/news/korea-inc-returns-debt-market-200000054.html|title=Korea Inc. Returns to Debt Market as Virus Fears Stay High|last1=Cho|first1=Kyungji|date=9 April 2020|website=Bloomberg|access-date=16 April 2020}}</ref>
Following passage of the U.S. [[Coronavirus Aid, Relief, and Economic Security Act]], the Fed announced on 9 April that it would buy up to $2.3 trillion in debt from the U.S. market, including from so-called "fallen angels," companies that were downgraded from investment-grade to junk during the chaos of March.<ref>{{cite web|url=https://www.msn.com/en-us/finance/smallbusiness/federal-reserve-announces-2423-trillion-in-additional-lending/ar-BB12nRxp|title=Federal Reserve announces $2.3 trillion in additional lending|last1=Crutsinger|first1=Martin|date=9 April 2020|agency=Associated Press|access-date=10 April 2020}}</ref> The announcement sparked a rally in junk bond [[Exchange-traded fund|exchange-traded funds]], as well as individual junk bonds.<ref>{{cite web|url=https://money.usnews.com/investing/news/articles/2020-04-09/junk-bond-prices-rally-after-fed-offers-a-lifeline|title=Junk Bond Prices Rally After Fed Offers Lifeline to Riskier Credits|last1=Duguid|first1=Kate|last2=Davies|first2=Megan|date=9 April 2020|website=U.S. News and World Report|access-date=10 April 2020}}</ref> ''The New York Times'' reported on 19 April that U.S. corporations had drawn more than $200 billion from existing credit lines during the COVID-19 crisis, far more than had been extended in the 2008 crisis.<ref>{{cite web|url=https://www.washingtonpost.com/us-policy/2020/04/18/record-government-corporate-debt-risk-tipping-point-after-pandemic-passes/|title=Record government and corporate debt risks 'tipping point' after pandemic passes|last1=Lynch|first1=David J.|website=The Washington Post|language=en|format=18 April 2020|access-date=19 April 2020}}</ref>
On 9 April, Saudi Arabia and Russia agreed to [[Petroleum politics|oil production cuts]].<ref>{{cite news|title=Saudi Arabia and Russia Reach Deal to Cut Oil Production|url=https://foreignpolicy.com/2020/04/10/saudi-arabia-russia-deal-cut-oil-production/|work=Foreign Policy|date=10 April 2020}}</ref><ref>{{cite news|title=Saudi, Russia agree oil cuts extension, raise pressure for compliance|url=https://www.reuters.com/article/us-oil-opec/saudi-russia-agree-oil-cuts-extension-raise-pressure-for-compliance-idUSKBN23A1OU|agency=Reuters|date=3 June 2020}}</ref> [[Reuters]] reported that "If Saudi Arabia failed to rein in output, US senators called on the White House to impose sanctions on Riyadh, pull out [[Saudi Arabia–United States relations|US troops]] from the kingdom and impose import tariffs on Saudi oil."<ref>{{cite news|title=Saudi Arabia, Russia Agree to Record Oil Cut Under US Pressure as Demand Crashes|url=https://www.voanews.com/economy-business/saudi-arabia-russia-agree-record-oil-cut-under-us-pressure-demand-crashes|work=VOA News|agency=Reuters|date=9 April 2020}}</ref>
Reporting following the May futures contracts for [[West Texas Intermediate]] crude oil falling into negative territory highlighted the financial strain on U.S. oil and oil services companies. As oil prices had plunged below the break even price for U.S. [[shale oil]] of about $40 per bbl, companies were unable to fix their finances by extracting more. ''[[MarketWatch]]'' noted that now "investors are likely to focus less on the viability of a driller’s operations and how cheaply it could [[Extraction of petroleum|unearth oil]]. Instead, money managers would look to assess if a company’s finances were resilient enough to stay afloat during the current economic downturn."<ref>{{cite web|url=https://www.marketwatch.com/story/crude-oil-plunge-challenges-renewed-faith-in-junk-bonds-2020-04-21|title=Crude oil plunge challenges renewed faith in 'junk' bonds|last1=Oh|first1=Sunny|date=21 April 2020|website=MarketWatch|access-date=21 April 2020}}</ref>
[[Virgin Australia]], one of two major airlines in Australia, entered [[Australian insolvency law#Voluntary administration|voluntary administration]] on 21 April, after being unable to manage $4.59 billion in debt.<ref>{{cite web|url=https://www.msn.com/en-us/finance/companies/virgin-australia-draws-20-suitors-in-race-for-sale-by-june/ar-BB13oS9F|title=Virgin Australia Draws 20 Suitors in Race for Sale by June|last1=Whitley|first1=Angus|last2=Wee|first2=Denise|date=30 April 2020|website=Bloomberg News|last3=Brumpton|first3=Harry|access-date=30 April 2020}}</ref>
Assets for companies in the U.S. [[car rental]] market, which were not included in the CARES Act, were under severe stress on 24 April. S&P Global Ratings had downgraded [[Avis Car Rental|Avis]] and [[The Hertz Corporation|Hertz]] to "highly speculative," while [[Credit default swap|credit default swaps]] for Hertz bonds indicated a 78% chance of default within 12 months and a 100% chance within five years.<ref>{{cite web|url=https://finance.yahoo.com/news/no-government-bailout-dooms-rental-100007408.html|title=No Government Bailout Dooms Rental-Car Bonds|last1=Chappatta|first1=Brian|date=24 April 2020|website=Bloomberg News|access-date=24 April 2020}}</ref>
The [[Bank of Japan]] increased its holdings of [[commercial paper]] by 27.8% in April 2020, which followed a rise of $16.9% in March. Efforts to alleviate strain on Japanese corporate finances also included increasing BoJ corporate bond holdings by 5.27% in April.<ref>{{cite web|url=https://www.reuters.com/article/us-japan-economy-boj-idUSKBN22J0CK|title=BOJ's commercial paper holdings jump nearly 30% as pandemic pain deepens|last1=Kihara|first1=Leika|date=7 May 2020|language=en|agency=Reuters|access-date=14 May 2020}}</ref>
=== May 2020 ===
Between 1 January and 3 May, a record $807.1 billion of U.S. investment-grade corporate bonds were issued.<ref name="MW_040520">{{cite web|url=https://www.marketwatch.com/story/apple-pulls-in-pricing-joins-record-corporate-debt-borrowing-spree-2020-05-04|title=Apple borrows $8.5 billion, joins record corporate debt borrowing spree|last1=Wiltermuth|first1=Joy|date=4 May 2020|website=MarketWatch|access-date=9 May 2020}}</ref> Similarly, U.S. corporations sold over $300 billion in debt in April 2020, a new record. This included Boeing, which sold $25 billion in bonds, stating that it would no longer need a bailout from the U.S. government.<ref name="Bloomberg_010520">{{cite web|url=https://www.msn.com/en-us/finance/markets/deluge-of-debt-is-making-corporate-america-riskier-for-investors/ar-BB13uaMK|title=Deluge of Debt Is Making Corporate America Riskier for Investors|last1=Pitcher|first1=Jack|last2=Mutua|first2=Caleb|date=1 May 2020|website=Bloomberg|access-date=3 May 2020}}</ref> Apple, which borrowed $8.5 billion potentially to pay back the $8 billion in debt coming due later in 2020; Starbucks, which raised $3 billion.;<ref name="MW_040520" /> Ford, which sold $8 billion in junk-rated bonds despite just losing its investment rating; and cruise line operator [[Carnival Corporation & plc|Carnival]], which increased its offering to $4 billion to meet demand.<ref>{{cite web|url=https://www.investopedia.com/fed-spurs-corporate-bond-bonanza-4844120|title=Fed Spurs Corporate Bond Bonanza|last1=D'Souza|first1=Deborah|date=5 May 2020|website=Investopedia|language=en|access-date=9 May 2020}}</ref> The main reasons for the lively market are the low interest rates and the Fed's actions to ensure market liquidity. The iShares iBoxx USD Investment Grade Corporate Bond, an [[exchange-traded fund]] with assets directly benefiting from Fed actions, grew by a third between 11 March and the end of April.<ref>{{cite web|url=https://www.cnbc.com/2020/05/01/the-corporate-bond-market-has-been-on-fire-during-the-coronavirus-crisis.html|title=The corporate bond market has been on fire during the coronavirus crisis|last1=Cox|first1=Jeff|date=1 May 2020|publisher=CNBC|language=en|access-date=3 May 2020}}</ref> However, companies are growing increasingly leveraged as they increase their debt while earnings fall. Through the end of April 2020, investment-grade corporate bonds gained 1.4% versus Treasury bonds' 8.9%, indicating potential investor wariness about the risk of corporate bonds. Morgan Stanley estimated 2020 U.S. investment-grade bond issuance at $1.4 trillion, around 2017's record, while Barclays estimated the non-financial corporations will need to borrow $125–175 billion in additional debt to cover the drop in earnings from the pandemic recession.<ref name="Bloomberg_010520" />
On 4 May, U.S. retailer [[J.Crew]] filed for bankruptcy protection to convert $1.6 billion in debt to equity. Its debt largely resulted from the 2011 leveraged buyout by its current owners. J.Crew became the first U.S. retailer to go bankrupt in the COVID-19 downturn.<ref>{{cite web|url=https://www.washingtonpost.com/business/2020/05/04/jcrew-bankruptcy-chapter-11-coronavirus/|title=J. Crew files for bankruptcy, the first national retail casualty of the coronavirus pandemic|last1=Bhattarai|first1=Abha|date=4 May 2020|website=The Washington Post|language=en|access-date=4 May 2020}}</ref> Also in the week of 4 May, the Chamber of Deputies in the [[National Congress of Brazil]] was seeking to pass an amendment to the [[Constitution of Brazil|Constitution]] that would allow the [[Central Bank of Brazil|Brazil]] to buy private sector securities. However, the Central Bank was concerned that bank officials could face accusations of corruption for buying assets from individual companies and were seeking personal liability protection for Central Bank purchases.<ref>{{cite web|url=https://www.nasdaq.com/articles/brazil-central-bank-seeks-legal-cover-for-qe-on-corporate-debt-sources-2020-05-05|title=Brazil central bank seeks legal cover for QE on corporate debt -sources|last1=Ayres|first1=Marcela|date=5 May 2020|publisher=NASDAQ|language=en|access-date=9 May 2020}}</ref>
On 12 May, the Fed began buying corporate bond ETFs for the first time in its history. It stated its intention to buy bonds directly "in the near future." As companies must prove that they can not otherwise access normal credit to be eligible for the primary market facility, analysts opined that it may create a stigma for companies and be little used. However, the guarantee of a Fed backstop appears to have ensured market liquidity.<ref>{{cite web|url=https://www.nytimes.com/2020/05/12/business/economy/fed-corporate-debt-coronavirus.html|title=Fed Makes Initial Purchases in Its First Corporate Debt Buying Program|last1=Smialek|first1=Jeanna|date=12 May 2020|website=The New York Times|access-date=14 May 2020}}</ref>
In its annual review on 14 May, the [[Bank of Canada]] concluded that its three interest rate cuts in March and first ever bond buying program had succeeded in stabilizing Canadian markets. However, it expressed concern about the ability of the energy sector to refinance its debt given historically low oil prices. About C$17 billion in Canadian corporate bonds was sold in April 2020, one of the largest volumes since 2010.<ref>{{cite web|url=https://www.reuters.com/article/us-canada-cenbank/bank-of-canada-says-its-coronavirus-measures-appear-to-be-working-frets-over-energy-idUSKBN22Q2DC|title=Bank of Canada says its coronavirus measures appear to be working, frets over energy|last1=Johnson|first1=Kelsey|last2=Ljunggren|first2=David|date=14 May 2020|language=en|agency=Reuters|access-date=14 May 2020}}</ref>
=== June/July 2020 ===
{{expand section|date=July 2020}} Credit ratings for industries such as energy/oil, retail, entertainment, travel/leisure and banking were affected most heavily by the pandemic. By July 2020, [[S&P Global]] and [[Fitch Ratings]] had initiated almost as many credit downgrades as the [[2007-08 financial crisis]]. Canada was the first country to lose its triple "A" credit rating in June 2020.<ref>{{cite web|url=https://www.reuters.com/article/us-health-coronavirus-ratings-graphic/how-the-coronavirus-is-crushing-credit-ratings-idUSKCN24U18Y|title=How the coronavirus is crushing credit ratings|agency=Reuters}}</ref>
== See also ==
* [[Economic impact of the COVID-19 pandemic]]
* [[List of events affected by the COVID-19 pandemic]]
* [[Impact of the COVID-19 pandemic on education]]
* [[Impact of the COVID-19 pandemic on religion]]
* [[Impact of the COVID-19 pandemic on politics]]
* [[Impact of the COVID-19 pandemic on sports]]
* [[Impact of the COVID-19 pandemic on science and technology]]
* [[Impact of the COVID-19 pandemic on cinema]]
== References ==
{{Reflist}}
== External links ==
* [https://www.bbc.com/news/business-51706225 Coronavirus: A visual guide to the economic impact] BBC
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