We’re All Japan Now, Trump Sentiment Risk, Surgical ECB: Eco Day

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Welcome to Friday, Europe. Here’s the latest news and analysis from Bloomberg Economics to help take you through to the weekend:

• There aren’t many precedents for the trauma that financial markets have suffered this week, as the coronavirus crisis drove U.S. stocks into a bear market and briefly sent yields on every Treasury bond below 1%. Larry Summers said the U.S. now confronts a stagnation like Japan’s as government bond yields plunge to ultra-low levels
• The U.S. ban on travel from Europe for the next 30 days, coming at the same time as plunging markets, threatens to decimate consumer confidence, writes Yelena Shulyatyeva
• ECB chief Christine Lagarde unveiled a calibrated package of stimulus, spearheading the region’s financial response to the coronavirus with measures intended to “surgically” support key parts of the economy. Policy makers didn’t even propose cutting interest rates despite widespread market expectations they would
• The Fed offered a huge injection of liquidity to the Treasury market to counter signs of market dysfunction. The Bank of Canada followed suit, taking steps to add liquidity into money markets as the economy appears on the brink of recession from the double hit of the coronavirus and tanking oil prices
• Australia’s fiscal-monetary injection is unlikely to be sufficient to prevent the economy from sliding into its first recession since 1991, Goldman Sachs Group Inc. said. Here’s why central banks Down Under are moving closer to QE
• The BOJ is likely to add stimulus next week to combat a recent plunge in stocks, a surge in the yen and an escalating coronavirus pandemic that threatens to trigger a deep recession
• Singapore must consider tapping past reserves to help its people and businesses that are “bleeding,” President Halimah Yacob said. It’s also preparing a second package of measures as the outbreak weighs on the economy, but won’t lock down the city-state
• Indian policy makers pledged to use their record $481 billion foreign-currency arsenal to stem a market rout that threatens to spill into an already-decelerating economy
• A pandemic-driven global recession is becoming more likely by the day as the flow of goods, services and people face ever-increasing restrictions and financial markets slump
• Italy, the U.K. and Australia were among the latest to add to a fast-rising global tally of government stimulus to counter economic damage from the outbreak. German Chancellor Angela Merkel’s administration is prepared to abandon its long-standing balanced-budget policy to help finance measures to contain the virus fallout
• The U.K. economy is ill-prepared to cope with shocks such as the coronavirus, with Budget forecasts pointing to “feeble” growth over the next five years. Meantime, the experience in the 1970s is giving one JPMorgan economist a model for the virus impact
• With oil prices an important driver of growth, inflation and monetary policy, the implications of the slump for the global economy are far reaching, writes Tom Orlik

To contact Bloomberg News staff for this story: Jeffrey Black in Hong Kong at jblack25@bloomberg.net

To contact the editors responsible for this story: Jeffrey Black at jblack25@bloomberg.net, Alexandra Veroude

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With assistance from Bloomberg