The coronavirus selloff is asset class-agnostic: everything is getting hammered.
Stocks are in the red, so are commodities, led by plummeting oil prices.
The ‘Everything Bubble’ is bursting," said Neil MacKinnon, Global Macro Strategist at VTB Capital. "The historically extreme valuations in US equity markets which investors have ignored for so long are coming home to roost."
Risk aversion has manifested itself in Treasury yields, that are lower than ever before. A "Japanification" of the US government bond market is under way, MacKinnon said.
Japan has had ultra-low interest rates and bond yields for years, but the desired growth bump never came. Market participants refer to this set of circumstances as "japanification". It has also been observed in Europe.
Central banks around the world have loosened monetary policy in the face of the coronavirus crisis, but "the risk is that these policies fail to work in generating sustainable economic growth, as has been the case in Japan," MacKinnon said.