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Q1 2020

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Key Takeaways, First Quarter 2020

By Ralph Goldsticker, CFA | 17 April 2020

The first quarter of 2020 was dominated by the COVID-19 virus and its impact on world health and the global economy. There has been extreme volatility across equity and fixed income markets. Despite unprecedented monetary and fiscal policy responses, all risk-based asset classes (i.e., bar Treasuries) fell significantly. As a result of the panicked selling, volatility spiked, liquidity declined, and T-Bill yields turned negative. By the end of March, dramatic actions by the Fed and other central banks, combined with massive fiscal stimulus plans, resulted in some improvements in liquidity and stock prices with a corresponding tightening in credit spreads. Uncertainty and volatility remain high.



Stock markets ended an 11-year bull market – the fastest plunge into bear market territory in history.

  • The S&P 500 climbed through February 19, then fell 34% by the last week of March, climbed 16% from the bottom, and finished down 23% from the peak and down 20% for the quarter.

  • The broad US stock market fell 21% during the quarter. Large caps fell 20% and small caps fell 31%.

  • Developed international stock markets fell 23%, and emerging markets fell 24%. 

  • Growth stocks fell less than value stocks: -14% versus -27%.


Fixed Income

Interest rates on Treasury Bonds fell, and credit spreads widened. The flight to quality caused liquidity to dry up, widening bid-ask spreads on all but the most liquid Treasuries. Liquidity improved somewhat by the end of March, but remained lower than normal.

  • Treasury bonds gained 8.2%, while widening spreads caused investment grade corporates to fall 3.1% and high-yield to fall 12.7%.

  • Yields of all Treasuries fell, but the demand for liquidity caused the yield curve to steepen. The 1-year Treasury yield fell 1.42%, the 10-year Treasury yield fell 1.25% and the 30-year Treasury yield fell 1.07%.



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