While financial markets recouped the majority of the losses suffered in March, economic activity is nowhere near normal levels.
The corporate bond markets in Canada and the U.S. rallied substantially on the back of actions from central bankers, with the announcement of their respective bond purchasing programs.
Equity markets bounced back sharply with growth-focused markets and those with more cyclical constituents tending to fare well.
In the short run, there is likely to be an upward bias to inflation as income levels have been supported by government programs while the supply of goods and services is still constrained.
Although financial markets are clearly anticipating a “V-shaped” economic recovery, much will come down to the size and impact of the expected second wave of infections expected in the autumn months.
While the ability to weather the storm caused by the pandemic is important in the near-term, we continue to keep a long-term perspective, investing in solid companies that can both sustain the current period of economic uncertainty and excel competitively in a post COVID-19 world.