Incremental news on COVID-19 is likely to point towards greater healthcare capacity and lower mortality rates than current consensus. On balance, this is bullish for risk assets, despite risks of second waves after the reopening of some economies.
As the global COVID-19 curve flattens, policymakers are considering gradually lifting mitigation measures (Chart 1). Such moves however could lead to a resurgence of infections, especially in countries where curve flattening has been achieved through strict measures such as New Zealand, Israel and Austria (Chart 2). By contrast, a second wave of infections appears less likely in Australia, Greece and Germany, which have flattened their curve despite less stringent measures (due to data issues I am not going to discuss China).
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