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The markets lost their appetite for risk in the latter part of June. This was mainly due to reports of increased cases of COVID-19 around the world, leading to fears of another lockdown.
But, whether we are heading into a second wave is still a controversial subject – even among scientists, let alone politicians.
The uncertainty of how the pandemic will evolve and what governments will do about it has significant economic consequences.
Businesses and consumers are holding onto liquidity in case they are subject to another prolonged period of a lack of income. And this inability to plan and develop future projects depresses the economic outlook, making investment less appealing.
Therefore, the mere threat of a second wave could be just as bad as the second wave itself, in economic terms.
Is This a Second Wave?
The recent global uptick in cases has different interpretations, depending on where you are.
For most of Europe and China, in particular, a significant increase in cases cou...
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