Closing Wrap - Tuesday 02.06
Headlines
  • White House Weighs Options For Next Stimulus Bill
  • US To Initiate Tariff Probe Into India, Spain Over Digital Tax
  • EU Says Russia Should Not Yet Rejoin G7, Despite Trump Plan
  • EU Seeks To Curb State-Backed Foreign Rivals
  • Iraq Pledges To Further Cut Oil Output
  • Russia's May Oil Output Fell Close To OPEC+ Target
  • China Nudges Banks To Help Small Businesses
  • Renault's State-Backed Loan Carries No Major Conditions, Says Chairman
  • Bayer Fights Jury Loss In Bid To Minimize Roundup Payouts
  • Wells Fargo Stops Making Loans To Most Independent Car Dealerships
Commentary
Incoming BoC Chief Macklem Likely To Stay The Course At Inaugural Meeting

Tiff Macklem’s first rate meeting at the helm of the Bank of Canada on Wednesday is expected to produce virtually the same policies set during the last meeting, according to economists.

 

The overwhelming market consensus is for the bank’s governing council to keep the overnight rate at 0.25pct and remain prepared to add to its current quantitative easing programme if required. At the start of the corona crisis the bank was quick to implement major liquidity programmes amounting to weekly asset buys of at least CAD5bln of Government of Canada bonds.

 

Since the crisis began, the bank has reduced its policy interest rate by a total of 150 basis points to 0.25pct, what the bank calls its "effective lower bound". (LiveSquawk – Continue Reading)

ECB Set To Expand, Extend PEPP – Analysts

Economists say the European Central Bank will add a half a trillion euros to its Pandemic Emergency Purchasing Programme (PEPP) and extend the scheme into 2021 amid concerns the Eurozone economy could contract by up to 10pct or more this year.

 

The ECB Governing Council’s two-day meeting is set to commence Wednesday, and policymakers are expected to hold interest rates at current levels as they drastically boost quantitative easing measures designed to support Eurozone economic activity slowed by Covid-19 lockdown restrictions.

 

GDP in the single-currency area fell a record 3.8pct in the first quarter, and many economists along with the ECB have said the contraction in the current three-month period will likely be even worse.

 

At its last rate decision meeting in late April, the bank reduced the lending rate available for its long-term TLTRO III bank refinancing operations to -1pct and introduced seven non-targeted refinancing operations called PELTROs. (LiveSquawk – Continue Reading)

German Unemployment Set For Another Surge

An expected rise in German unemployment could push the total number of additional claims for the April-May period to over half a million in a country where more than 10mln people were already eligible for support from the government’s short-time work scheme.

 

The seasonally adjusted number of unemployed in May is expected to jump by 200,000 after April’s record increase of 373,000, which was nearly five times the market estimate of 76,000 and almost 400 times March’s rise of 1,000.

 

The seasonally adjusted unemployment rate in May is forecast at 6.2pct versus April’s 5.8pct mark. (LiveSquawk – Continue Reading)

OPEC+ Oil Cut Extension Talks Complicated By Saudi And Russia Haggling

Saudi Arabia and Russia appear at loggerheads over an extension to the historic output cut agreement by the so called OPEC+ alliance, just days before the producer coalition is due to hold its much anticipated meeting, according to people involved in the discussions.

 

The kingdom has proposed a three-month extension of the 9.7 million b/d cut accord, while Russia -- the key non-OPEC partner in the deal -- has countered with one month.

 

The cuts otherwise are set to be scaled back to 7.7 million b/d starting in July for the rest of 2020.

 

OPEC+ is scheduled to meet June 9-10 via webinar, but Algerian energy minister Mohamed Arkab -- who holds OPEC's rotating presidency for 2020 -- has proposed moving the gathering forward to June 4 to help members determine July export volumes. (S&P – Continue Reading)

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