13 Mar Another shock to the system: Oil price war breaks out; COVID-19 cases expected to rise
Another shock to the system: Oil price war breaks out; COVID-19 cases expected to rise
The question remains: Will the COVID-19 virus coupled with an all-out oil price war cause a recession?
We are inclined to think we are not headed there just yet in the US, but the chances of a recession in Canada are increasing as oil continues to plummet and businesses begin to default, exposing Canadian banks to greater risks. Canadian corporate to government bond yield spreads—a measure of corporate risk—remain at relatively low levels, hovering around 1.0%. That is similar to the levels we saw during the December 2018 pullback.