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Good morning. Lockdowns are extended in Europe, China may have concealed the extent of the outbreak and economists are trying to figure out what shape a recovery might take. Here’s what’s moving markets.

Lockdowns Extended

Having shown some signs of stabilizing this week, Italy’s death count fell on Wednesday and the government extended lockdown measures for another two weeks. It leaves policymakers in the difficult position of weighing the risks of easing restrictions too soon against the huge economic implications of the measures. Germany’s government also agreed with regional states to lengthen the lockdown as work starts on a 500-bed temporary hospital in Berlin that officials hope they ultimately won’t need. European government have also laid out their proposals for how the bloc can support the hardest-hit economies.

China and the U.S.

China is said to have concealed the scale of the coronavirus outbreak in the country, under-reporting both the number of cases and deaths. The report, based on information from three U.S. officials, is likely to add to criticism of China’s role in the virus’s spread, particularly given the pressures the U.S. is facing. Deaths in New York have continued to rise and with many more younger patients than have been seen elsewhere, while  New Jersey is facing similar stresses. More states are imposing lockdowns and the Trump administration is debating whether it will ask citizens to start wearing masks. And the tone of the president’s forecast has changed to reflect the dire economic hit the country faces.

Alphabet Soup

If nothing else, the current downturn is at least spurring economists to get creative in figuring out which letter the shape of a recovery will resemble, with V or even a Nike ‘swoosh’ at the more optimistic end and the more pessimistic expecting global growth to trace an L or a W shape. All as investors use five ‘P’s in their attempts to figure out whether the market has reached a bottom. Confidence in the stock market was zapped on Wednesday with equities in Europe and the U.S. sinking and only a portion of that drop looking set to be recovered on Thursday. And there are concerns that the stimulus measures being taken in developed economies could mean capital flight from their emerging counterparts, creating new headaches.

Credit Markets

If you don’t regularly pay attention to the corporate debt market, the time to do so is now. The market has started the second quarter at a speedy pace and as the dust settles from the initial virus shock, this market will be where to survey the aftermath. As could be expected given the carnage in travel markets, cruise operators, airlines and cinema chains are all considering their financing options, and bankruptcy filings are emerging from oil explorers and bakeries. Add to this warnings of potential havoc in the collateralized loan obligations space and the exposure of some supercharged debt bets. And while some think the junk bond market has never looked this good, others think the worst is yet to come.

Coming Up…

Stock futures are marginally positive for Europe and oil prices are bouncing back after another drop caused by rising output levels from key producers. Trump is set to meet with oil producers amid the chaos. U.K. house price data is likely to be closely watched with the market effectively paralyzed at present and housebuilders shutting down sites, while the weak U.S. factory orders and labor data on Wednesday will be followed by jobless claims, likely to show another very sharp rise.

What We’ve Been Reading

This is what’s caught our eye over the past 24 hours. 

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