David Riley, chief investment strategist at BlueBay Asset Management, talks to Investment Week about the severity of the recession and the potential market recovery in the same week that saw oil prices turn negative.
Last week, the price of oil fell into negative territory. What happened?
What we saw last week was extraordinary. After getting used to negative bond yields, this crisis has now brought us negative oil prices.
That said, it was the price of US West Texas Intermediate oil for short-dated delivery - so for delivery next month - that collapsed on Monday from about 10 dollars per barrel to -40 dollars per barrel.
It did subsequently bounce into positive territory and the actual volume of oil traded at that level was very small.
A key driver was selling by oil ETFs holding short-term futures contracts that do not take physical delivery of oil, but could find no buyers because the oil storage hub in Cushing, Oklahoma - the world's biggest with roughly 76 million barrels capacity - is almost full.
But I do not think the volatility and negative oil prices should be dismissed as due to market technicals, even though it does raise questions over retail investor participation in ETFs and the sometimes-destabilising feedback loops they create in markets.
A negative oil price is unprecedented. What does this actually mean?
The oil market is saying loud and clear it does not expect a quick and strong recovery in the global economy and hence oil demand.
I think this underscores a key tension in global financial markets right now between deteriorating economic fundamentals and central bank liquidity.
Right now, we are in the middle of the deepest recession in modern history with a very uncertain path to recovery.
But the unprecedented scale of central bank liquidity is supporting financial assets - the question mark is whether it will ultimately work in underpinning the real economy.