The good news is that the U.S. economy has recovered from a bout of softness last summer. The February employment report, with 275,000 jobs added last month, was an upside surprise to most economists.
While everyone expect the virus to cause a slowdown in the next few months, employers are unlikely to start laying workers off, except in the energy and travel industries. The cost of replacing them in a tight labor market is simply too expensive. Moreover, many economist think a V-shaped rebound in the second half is likely when pentup demand surges after the virus issues are ultimately controlled.
In the bond market, Patterson acknowledged there is a possibility of negative interest rates on longer-maturity U.S. Treasurys. However, they likely would be the result of market forces, not central bankers at the Fed.
If one takes a scan of asset classes, most are reacting in the way one would expect. Investors with “diversified portfolios are holding up” a lot better than many who hold concentrated positions. Not surprisingly, “we’ve seen high yield [credit] spreads blow out.”