Effect of economic policies on the stock and bond market under the impact of COVID-19

The global epidemic of COVID-19 has made a huge impact on global health and financial markets. And the spread of the virus has stalled economic development in many parts of the world. As stocks and bonds are two important financial assets, how to take appropriate economic policies to restore the stock and bond markets is the focus of governments as they are seeking for quick recovery. Based on the Event Study method and the GARCH model, data from 1 October 2019 to 1 April 2020 were collected from 26 countries or regions as analytic samples. The results show: 1) COVID-19 has made greater impacts on the stock market than the bond market; 2) the economic policy responses after the COVID-19 has brought impacts on both of the stock and the bond markets; 3) the monetary policy responses has brought greater volatility to the stock market than the fiscal policy responses, while the fiscal policy responses has brought greater volatility to the bond market than the monetary policy; 4) the fiscal policy has brought more positive effects on the stock market, and monetary policy has brought more positive effects on the bond market. This research is helpful to understand the mechanism of COVID-19's impacts on the stock and bond market. And it is of great practical significance to the governments' decisions to make economic policy responses after an epidemic.