The coronavirus-induced investor panic continued on Monday, sending the NYSE tumbling by over 8 percent, the FTSE by nearly 7 percent, and the Stoxx 600 index of leading EU shares by 7.5 percent. Fearing the worst, investors are fleeing equities and short-term bonds for the safety of gold, long-term bonds and, in some cases, cash.

The precipitous decline in US equity prices comes on the back of the “longest bull run in history” — the twelve years since the financial crisis have witnessed an almost uninterrupted period of rising US equity prices. In the UK and Europe equity prices have been impacted by Brexit and currency movements, but in most advanced economies, stock prices have remained very high relative to likely trends in corporate profitability over the next several years.

Government bond yields, meanwhile, have sunk to historic lows on the back of extraordinarily loose monetary policy. Some governments — notably Germany’s — have benefitted from negative interest rates, meaning that investors are paying the German government for the privilege of holding its debt. Germany, however, has stuck to its policy of schwarze Null, or “black zero,” which requires the government to maintain a budget surplus.