Closing Wrap - Wednesday 03.06
Headlines
  • Saudi, Russia Agree Oil Cuts Extension, Raise Pressure For Compliance
  • Gulf OPEC Members Not Planning Additional Voluntary Oil Cuts Beyond June
  • OPEC+ Technical, Ministerial Committee Meetings Set For Mid-June
  • BoC Maintains Target For Overnight Rate, Scales Back Some Market Operations
  • Fed Expands Number And Type Of Entities Eligible For MLF
  • Trump Admin. Selects Five Coronavirus Vaccine Candidates As Finalists
  • Trump: ‘Not Excited About Anything With Respect To China Now’
  • China Cancels Some US Farm Shipments, Maritime Executives Say
  • US To Block Chinese Airline Flights To And From US
  • BoE Governor Urges Banks To Step Up No-Deal Brexit Plans
  • BoE Delays Report On Health Of UK Banks To Aug. 6
  • Debt Relief For Poorest Countries Could Extend Beyond 2020, G7 Says
  • Tesla And UK Government Are Working On A Factory
  • Huawei Hid Biz Operation In Iran After Reuters Reported Links To CFO
  • Snap Will Stop Promoting Trump’s Account; Concludes His Tweets Incited Violence
Commentary
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 Up Sharply In May

Frankfurt, 3 June 2020 (LS NEWS) – Unemployment in Europe’s largest economy continued to climb in May while more than 1mln workers became eligible for the country’s Kurzarbeit short-term work programme, the Federal Labour Office in Nuremberg said Wednesday.

 

Jobless ranks swelled by a seasonally adjusted 238,000 last month versus the market estimate of 200,000 and the downwardly revised rise of 372,000 in April, the office said. The adjusted unemployment rate jumped to 6.3pct to surpass the forecast of 6.2pct and April’s 5.8pct reading.

 

“The unemployment report for May offers clear evidence that joblessness is in fact now rising even as the government’s Kurzarbeit scheme is being used liberally by firms,” said Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics.

(LiveSquawk - Continue Reading)

Coronavirus Fiscal Easing Announcements Exceed 7% Of World GDP

Macro policy easing responses to the coronavirus crisis have reached unprecedented levels, with direct fiscal stimulus measures totalling USD5 trillion (7% of 2019 GDP) for the "Fitch 20" countries covered in its Global Economic Outlook (GEO).

 

"The scale of fiscal easing announced to date, which could increase further, is significantly larger than the fiscal response seen after the global financial crisis, when the advanced economies saw a fiscal easing of around 3%-4% of GDP. Massive policy easing will undoubtedly help the pace of the post-crisis economic recovery," said Marina Stefani, Director at Fitch Ratings.

 

Central bank responses have been similarly impressive - with new quantitative easing (QE) asset purchases expected to reach 20% of GDP in the US, 9% in the UK and Canada, and more than 7% in the eurozone - and a wide array of new credit facilities. The ECB could also further increase its bond-buying programme. (Fitch – Continue Reading)

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