As we approach the end of April, I hope everyone has settled into the new normal and is staying safe. The Colling Group is in our sixth week of remote operations and we've coped well, given the circumstances. We've adapted from face-to-face team meetings to digital meetings and conference calls every day to stay in touch. Each team member has started operating with a remote desktop to give them full access to their workstations at home.

As we look ahead, we are starting to see the light at the end of the tunnel. However, our enthusiasm remains tempered by the fact that considerable uncertainty about the spread of the virus remains. On a positive note, while COVID-19 cases continue to rise across the globe, the rate of new cases is beginning to slow in many regions. In fact, some of the areas hit hardest during the initial outbreak have begun reporting "lower-lows" each week. Governments around the world are now planning re-opening of the economy in phases. Naturally, there is an open debate about the timing of such a move and there remains significant risks if this turns out to be premature. For now, global equity and fixed income markets are moving higher in anticipation of a positive roll out.

We've been watching the events unfolding, and wanted to highlight a few key points:

Credit Spreads

Global credit spreads have come down significantly. High yield spreads reached a peak of 10.87% on March 23rd but have come down to 8.03% this week. We would like to see them come down further, to below 5.00% before we are comfortable that they are back in a normal range.

Volatility Index (VIX)

Like credit spreads, the VIX hit a crisis peak and all-time high of over 83 around March 16th. Since then, it has come down significantly and sits at 34.89 as I'm writing this post. This is a good sign but it remains elevated. A reading under 25 is something we would see under normal conditions.

Equity Market Retracement

The rebound in equity markets has been significant. Markets were in full panic mode in March but have calmed and many asset managers have taken a more constructive view. We went from a period of take-no-prisoners selling to a realization that some companies can thrive in the new environment and some will emerge competitively stronger. We think much of the current retracement from the lows in March is complete and would expect a pause or pullback in the near term. Global government stimulus has been unprecedented and we believe that this will be supportive to equity prices over the next six to twelve months. However, with a VIX reading still over 30, we do expect continued volatility in the weeks and months ahead.

Overall, our multi-asset class portfolio strategies have defended well during this unprecedented crisis. As always, we remain careful in our approach. We are taking in the fast moving data on a day-to-day basis but our focus remains on helping our clients achieve their long-term objectives.