Bewildered.

Risk assets were steady Wednesday as investors and traders attempt to make sense of what Deutsche Bank called a “bewildering array of headlines” from the first two days of the week.

At this point, everyone is seemingly waiting on the next shoe to drop, whether it’s some overtly negative development on the virus front or something unequivocally bullish around stimulus.

Beijing said Wednesday that the number of confirmed cases in the city’s outbreak is likely to grow “for a period of time” as health officials test hundreds of thousands of citizens in a bid to quell a flare-up tied to a food supply center. Schools are closed and 1,200 flights were canceled today.

1,255 flights cancelled at two Beijing airports, nearly 70% of all scheduled trips, as of 9:10 am Wed, under the impact of #COVID19 in the capital. Passengers who booked train tickets in and out of Beijing as of Tue have been allowed to refund tickets without fees. pic.twitter.com/md5tR92KVU

— People's Daily, China (@PDChina) June 17, 2020

Local airline shares fell. At least refunds were available.

In New Zealand, Prime Minister Jacinda Ardern was in no mood for shenanigans. She called in the military after two visitors from the UK were allowed to leave quarantine early, only to test positive.

Ardern was livid (and I do mean livid) in a press conference, calling the lapse “unacceptable” and declaring that it “cannot happen again”. “I am appointing the Assistant Chief of Defense, Air Commodore Digby Webb, to oversee all quarantine and managed isolation facilities, including the processes of exit around the people who have been in these facilities”, she said. 320 people had contact with the two women from the UK.

Brazil is, of course, still in crisis. I don’t think it would be a stretch to say that the virus is spreading unchecked in the country. There were 34,918 new cases over the past 24 hours, and 1,282 new fatalities. And that’s just the ones we know about. New estimates from PUC University (in Rio de Janeiro) project 1.3 million cases by the end of this month. There are 920,000 currently. Jair Bolsonaro’s response to the outbreak easily counts as the biggest failure globally.

South Korea reported more than three-dozen new cases over the past 24 hours, but at the risk of trivializing a potential global second wave, Seoul has bigger problems right now in the form of a hyper-assertive Kim Yo Jong, who is spearheading the propaganda push around recent provocations and seems to be managing the daily affairs of the regime in Pyongyang. So far, this is largely a mystery and some speculate that Kim Jong Un may have lingering health issues or some other rationale that’s informing his decision to allow his 30-year-old sister to personally oversee a new pressure campaign against the South.

Seoul on Wednesday said they’re running out of patience with what presidential spokesman Yoon Do-han called “absurd” behavior from Kim’s sister, who the South called “very rude”. The won paced declines in emerging market currencies.

For markets, all of this is just a sideshow until something spins totally out of control. Brazil’s situation is obviously past the point of no return, and it looks as though a humanitarian crisis looms. But as callous as this sounds, that isn’t likely to affect developed market equities barring some kind of total meltdown in the currency.

Speaking of currencies, the dollar’s recent declines have aided and abetted the rally in risk assets, but it’s important to keep perspective. The greenback is sitting basically at the same levels where it started the year. That, even as STIRs have attempted to price in negative rates from the Fed, and “twin deficit” chatter ostensibly paints a bearish picture. Some of the resilience was due to still wide rate differentials with NIRP economies, and although the Fed’s move back to the lower-bound will chip away at that pillar, memories of March’s mad dash for USD cash are still fresh. As it turns out, nobody wants anything but dollars in a real crisis – imagine that.

SocGen’s Kit Juckes has the other side of that story. “As the virus continues to spread outside New York, the US recovery isn’t strong enough for the Fed to ease up”, he wrote, in a Wednesday note, adding that Powell “continues to sound about as dovish as possible, all the while stressing that negative rates are not popular on the FOMC”. Juckes added the following:

I still worry, after listening to his Q&A in Congress yesterday, that politicians seem to want the central bank to take on a host of responsibilities which live firmly with the government, but that’s the new way. It all means that the Fed is involved in both the design and financing of government policies to help the economy through a crisis, and leaves me wondering why we even continue with the charade of the Government issuing debt and the Fed buying it. I’m going to struggle to be a dollar bull against that back-drop, even if it goes up on risk-off days. For those, I’d just rather own the yen.

Fair enough, although when it comes to “charades” tied to government financing by the central bank, Japan is in a league all its own.

In any event, Wednesday had the potential to be a relatively quiet day, even as the “bewildering” nature of the cross currents persists.