The only winner, really, was the dollar, which hit the highest on record. And that only tightens international financial conditions. On Friday as a degree of calm returned to markets, the greenback was falling. Yet it remains 3.8% higher than a week ago.

“The risk is that the shortage of dollars has already begun to trigger negative feedback loops in a few countries,” Chester Ntonifor, a foreign-exchange strategist at BCA Research, wrote in a note on Thursday.

Central banks are doing their bit. The European Central Bank on Wednesday night announced a 750 billion euro ($805 billion) quantitative easing program to help the euro zone economy deal with the Covid-19 shock. The Federal Reserve has seemed determined to deliver at least one banner measure a day, the latest being new swap lines with a range of peers.

There are signs this has helped ease some of the pressure that was building in the short-term funding markets. The rate on overnight repurchase agreements on Thursday fell back to within the Fed’s target range for the effective fed funds rate.

But stress remains high, even as stocks attempt a second day of gains and volatility eases. The doubt is whether policy makers have enough ammunition to head off this brewing crisis. Or if fiscal and monetary efforts can fix the damage wrought by a human sickness. Christopher Wood at Jefferies LLC reckons not -- he says investors should be focused on the rate of coronavirus infections above all else.

Meanwhile in some of the disconnects there may be opportunities. Citadel is raising a new relative value hedge fund to capitalize on volatility in fixed income.

At SEI, Barbaneagra also remains overweight on battered value stocks as their discount to the market widened even further. Already on Thursday, a long-short value strategy posted its biggest gain in data going back to 2000 as outsize moves earlier reverse amid a hint of calm over markets.

“Those extremely attractive oversold names will become recognized by the market,” he said. “The old rule of being greedy when everyone is fearful -- it still works.”

This article was provided by Bloomberg News.

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