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18th March Market Commentary - unprecedented times

By Henry Adams on 2020-03-18

This is a tough time for the world. Like most of you, our entire team moved to working from home as of yesterday, without any idea of when we will return to the office.

All meetings, lunches, drinks, travel and conferences have been cancelled indefinitely and we are quickly implementing new working routines for our various teams. We are certainly living in unprecedented times.

There is an extreme amount of news and a rapid pace of announcements. By the time pen hits paper something else has changed. Much is left to be written as we go into this very difficult period for everyone. If any of you would like to discuss markets or have any questions, please feel free to contact any of the team at any time.

At the time of writing, equities across the globe have now sold off faster than ever before, despite yesterday's modest recovery. Many records are unfortunately being broken. Central banks are stepping in and fiscal policy is evolving rapidly but thus far there does not seem to be an immediate (let alone permanent) way out of the market turmoil, let alone a solution to the ongoing health crisis. Tensions in the capital markets are going to continue as we move further into the pandemic, with contagion being a theme at the forefront of all of our minds in both our personal and professional lives. Unlike previous crises where the rotation out of equities and other risk assets and into typical safe haven markets has unfolded as one might expect (albeit sometimes at breakneck speed), this time seems different with selling pressures across almost every market. Even gold is lower than at the beginning of the year as investors go to "cash" in droves . We are also seeing firms in certain sectors drawing down on credit lines to ensure maximum liquidity is available when needed. Against this backdrop and with credit spreads widening heavily and liquidity stretched in even the deepest markets, there is naturally an increasing focus on the counterparty risk of the institutions holding these increasing cash balances.

TreasurySpring's primary focus has always been to provide our clients with access to the safest of homes for their cash holdings. Having experienced first-hand the huge dislocations in the money markets during the 2008 crisis, we built our platform to offer a safe haven for next time, a simple digital escape route from the concerns around correlation and liquidity that always come to the fore in times of extreme market stress. We do this by providing direct pass-through access to short-dated government assets and secured bank product, through our unique Fixed-Term Funds. Onboarding is simple, digital and need only be completed once for access to all products on the platform.

From an operational perspective, we invested huge amounts of time and money in building world-class technology early, to manage our operational processes such that we were set up to work remotely from the very outset, with the ability to trade, settle and issue FTFs from anywhere in the world. As such, the current changes in working habits have not had any effects on our operating model. We are well-capitalised and backed by several deep-pocketed institutional investors, all of whom use our platform for their own cash balances, so we believe that we are exceptionally well-placed to help our clients in these difficult times.

If you are concerned about counterparty risk exposures and/or would like to learn more about our platform, please just let us know.

Most importantly, we wish you and your families the very best as we all work to make the best of these challenging circumstances. To try to take a positive from all of this, I can think of no better country in which to find ourselves in times of adversity. We have suffered, triumphed and ultimately returned stronger many times before and I am sure that we will so again, hopefully quickly!

Articles of interest:

The plumbing behind world's financial markets is creaking. Loudly

Wall Street's fear gauge closes at highest level ever, surpassing even financial crisis peak

The best at-home workout streaming services to try during COVID-19

Coronavirus: 15 Good news stories from around the globe, show things do get better!

An FTF or Fixed-Term Fund is a regulated fund investment that offers exposure to a single investment-grade obligor for a fixed term, without the need for any client infrastructure. An FTF has many of the same characteristics as a term deposit, but can offer exposures outside of the banking sector. TreasurySpring is originating FTFs with sovereign, financial and corporate obligors.

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