Coronavirus and the markets

The spread of the coronavirus has led to the fastest bear market in U.S. history. P&I takes a closer look at the impact the coronavirus has had on financial markets.

COVID-19's global spread continues. More than half of global cases have been reported outside of China, the virus' country of origin, and 99% of daily new cases are outside of China.

Equity markets initially weren't fazed by the spread of the virus, but hit a breaking point as the reality of an eventual pandemic closed businesses and threatened economic growth.

Equity losses accelerated as the spike in volatility prompted a rapid sell-off.

Asset declines weren't isolated to equities. Corporate bond spreads spiked as corporate yield correlations disassociated from government bond yields.

Overall declines in both discount rates and assets sank corporate pension funding ratios and increased plan volatility. 

Public pension plan cash balance allocations shifted slightly higher as of Sept. 30, from the previous year, potentially insulating them from some first quarter losses. 

Target-date funds declined across most fund vintages, with the severity inversely related to their equity allocations, however the group as a whole stood up well compared to the broad markets.

Bond funds did well among the largest institutional active funds. The PIMCO Income Fund, the largest fund by assets, was down relative to its peers, while few equity funds were able to best the broad markets.