ANZ Research revisit the impact of SARS on AUD rates in 2003.
The outbreak of a coronavirus strain in the Chinese city of Wuhan has prompted a number of questions about the impact of the SARS virus on Australia in 2003. We’ve taken a look at what happened to the AUD rates market over that year. In undertaking this exercise, we are in no way implying that we think the Wuhan outbreak will unfold in anything like the same manner as SARS.
"In looking through the rate charts for that year, what stands out is the sell-off that took place in the week or two immediately following. For a market that was used to rates being a safe-haven from deflationary shocks, this seems difficult to understand. We expect the market reaction to a SARS-like event would be very different now," ANZ notes.
'The WHO declared a global alert on 12 March. Interestingly, this coincided with an upward spike in front-end pricing. This may, to some extent, have reflected the weakening of the AUD that occurred as a consequence of the WHO alert. Having said this, we note that the US front-end sold-off sharply in the immediate aftermath of the WHO alert Indeed, the moves by both markets were very similar which implies the AUD move wasn’t really a factor,," ANZ adds.