In late March 2020, Bloomberg’s measure of US financial conditions stood about six standard deviations in restrictive territory; major equity markets had shed between 25% and 35% in the space of five weeks; and commodity prices had plunged, with Brent crude, in particular, falling as low as $ per barrel, from an average of $ per barrel in January.
The strong global response of both fiscal and monetary authorities allowed a quick normalisation of financial conditions. Equity market and commodity prices have rebounded; corporate and sovereign spreads have narrowed; funding conditions in offshore dollar markets have improved, helped by bilateral swap lines made available by the Fed; and most emerging market currencies have stabilised, even though they remain much weaker than pre-crisis levels.