The COVID-19 crisis is likely to accelerate many underlying, secular disruptive forces already affecting economies and financial markets. This may only increase the difference between those companies, sectors, and countries that are being disrupted, and those that are acting more like disruptors. Distinguishing between the two is becoming crucial.

The U.S. political focus has shifted to the reopening of the economy.

A committed and decisive fiscal/monetary partnership to tackle the economic crisis is urgently needed, but Europe continues to lag behind. European policymakers face a moment of truth.

Over the next several quarters, monetary conditions will likely be set not only by Fed balance sheet policies, but also by the expected path of interest rates.

With euro area output expected to drop by almost 10% this year, and unemployment and fiscal deficits to rise, an ample, blunt and well-coordinated response from European ministers was warranted. However, the new measures announced by finance ministers last week disappointed – again.

Evidence from decades and even centuries ago, plus the unique circumstances of the current global health crisis and its economic impact, suggests we can expect a “New Neutral 2.0” of lower interest rates for longer.

The U.S. labor market disruption is the worst the country has experienced in recent memory, suggesting that the decline in overall activity could also be much more severe.

We expect the global economy and financial markets to transition from intense near-term pain to gradual healing over the next six to 12 months. However, there is the risk if not the likelihood of an uneven recovery, with significant setbacks along the way and some permanent damage.

The Fed has moved aggressively to stabilize core assets, including mortgages. Yet several market indicators are still concerning.

The $2.2 trillion stimulus is the biggest ever, but the U.S. Congress may be forced to do even more.

Liquidity could remain challenged, but valuations may be attractive for long-term investors.

Canada’s economy may be at greater risk for lasting damage, but we believe Ottawa is well-positioned to respond.

The conditions for a relatively quick and robust rebound rest on the success in containing the virus within a reasonable horizon, and a well-calibrated economic policy response.

The Fed’s aggressive support may help keep markets functioning, hasten recovery and avoid longer-term damage.

We believe Federal Reserve and U.S. Treasury efforts to improve overall market liquidity will have a positive effect on U.S. mortgage pricing, bringing opportunity to investors.