European Briefing - Friday 09.10
Headlines
  • Fed’s Rosengren: Limited Benefits Of More QE Puts Focus On Fiscal Aid
  • Fed’s Kaplan: Does Not See Fed Needing To Buy More Bonds Now
  • White House Open To A Bigger Stimulus Bill As Mnuchin, Pelosi Talk
  • WH Physician: Trump Can Return To Public Engagement On Saturday
  • AP: Debate Commission Will Not Change US Virtual Debate To In-Person
  • China Caixin Sep Services PMI: 54.8 Beats 54.3 Estimate; Composite: 54.5
  • Bank Of Canada Governor Keeps Door Open To Negative Rates Possibility
  • France Tightens Restrictions, NY, NJ See Most New Cases Since Mid-May
  • Italy Tops 4,000 Daily Coronavirus Cases For First Time Since Mid-April
  • FT: Brussels Looking To Divvy Up Old UK Fishing Rights In Brexit Deal
  • Times: UK's Sunak Is Expected To Announce A Local Furlough Plan Today
  • UK’s Sunak Plans A Carbon Emissions Tax To Help Rebuild UK Economy
  • Australian Aug Home Loans Soar 12.6%; 2025 Bond Auction: 6.19x Cover
  • US Gulf Shuts In 91.53% Oil Production, 61.82% Gas Production Amid Delta
  • WSJ: AMD Is In Advanced Talks To Buy Xilinx In A Greater Than $30B Deal
  • NXP Semiconductor: Q3 Sales Topped Forecast On Improving Auto Market
  • Gilead Remdesivir Data Shows Patients Recover 5 Days Faster On Average
Commentary
Fed's Kaplan Rejects Adding To QE, Eyes Eventual Taper

Dallas Federal Reserve President Robert Kaplan said on Thursday he sees no need to expand the central bank’s asset purchases to bolster the economic recovery and instead signalled support for winding stimulus down when the coronavirus crisis eases. “I’d be skeptical about the benefits of doing more,” Kaplan told Bloomberg Radio. Long-term interest rates are already low, and trying to push them down further by adding to the $120 billion in bonds the Fed is already purchasing each month would do little to help the real economy.

 

Kaplan added “the bond-buying needs to curtail, the Fed balance sheet growth needs to curtail,” when the crisis starts to lapse. “I don’t think it’s healthy for the markets to be addicted, or too reliant, on Fed presence ... it engenders fragilities.”

 

That view may be unpopular with investors, who have come to see the Fed’s balance sheet as expanding without limits even as Congress and the White House have reached an impasse on fiscal stimulus. It’s unclear how widely shared Kaplan’s desire to limit the expansion of bond buying is, but several of his colleagues have also addressed the issue lately. Kaplan dissented from the Fed’s September decision to keep interest rates at their current near-zero level until the economy reaches full employment, and inflation hits and looks set to rise about 2%, saying the Fed should have more flexibility.

(Reuters - Continue Reading)

WH Open To A Bigger Stimulus Bill As Mnuchin, Pelosi Talk

The White House shifted tack on Thursday, signalling that the administration is again leaning toward a large-scale stimulus bill after House Speaker Nancy Pelosi pushed back on the idea of individual measures for parts of the economy hit by the Covid-19 crisis.

 

Treasury Secretary Steven Mnuchin told Pelosi in a 40-minute call that President Donald Trump wants agreement on a comprehensive stimulus package, according to Drew Hammill, a Pelosi spokesman. Meanwhile, White House spokeswoman Alyssa Farah said, “we’ve made very clear we want a skinny package,” though she later clarified that position, telling reporters the administration is “open to going with something bigger.” She reiterated opposition to the $2.2 trillion plan from House Democrats.

 

Prospects for coming to an agreement have proved volatile since Trump pulled his negotiators out of talks on a comprehensive package on Tuesday. Stocks, too, have proved volatile, with airline shares rising and falling on shifting indications of the potential for a separate aid package for the industry.

(Bloomberg - Continue Reading)

Caixin: China's Services Sector Recovery Gathers Pace In Sept

The recovery in China’s service sector activity extended into a fifth straight month in September, an industry survey showed on Friday, with hiring increasing for the second month in a row. The Caixin/Markit services Purchasing Managers’ Index (PMI) rose to 54.8 from August’s 54.0, the highest reading since June and staying well above the 50-mark that separates monthly growth from contraction.

 

The services sector, which accounts for about 60% of the economy and half of urban jobs, had initially been slower to return to growth than large manufacturers, but the recovery has gathered pace in recent months as COVID-19 restrictions on public gatherings lifted.

 

Firms hired more for the second month in a row, although at a still modest rate, indicating some recovery in a labour market that has been hit by sharp falls in demand and epidemic restrictions earlier in the year. Domestic demand drove new orders, with the survey showing new export businesses received by Chinese services firms slipping further into contraction in September.  “The services sector’s post-epidemic recovery showed signs of speeding up,” said Wang Zhe, Senior Economist at Caixin Insight Group, in comments released alongside the survey. (Reuters - Continue Reading)

Gilead's Remdesivir Shaved 5 Days Off Covid-19 Recovery Time

Final data from Gilead Sciences Inc's GILD.O antiviral drug remdesivir showed the treatment cut COVID-19 recovery time by five days compared with patients who got a placebo, one day faster than indicated in preliminary data, the company and researchers said on Thursday. In patients who were on oxygen when they first got the drug, remdesivir - sold under the brand Veklury - reduced recovery time by seven days compared with placebo after 29 days, according to the 1,062-patient study, published in the New England Journal of Medicine.

 

The final study looked at data at 29 days of treatment, versus a preliminary study released in May that reported results after 15 days. Gilead’s drug was among the first to be used as a treatment for the novel coronavirus, and was one of the drugs recently used to treat U.S. President Donald Trump.

 

Remdesivir received emergency use authorization from the U.S. Food and Drug Administration on May 1, and has since been authorized for use in several other countries. Results of the overall study suggested the drug may reduce mortality, but the benefit was not statistically significant. In a separate analysis looking just at patients who received oxygen, however, the drug appeared to reduce the risk of death by 72 percent at day 15, and 70 percent by day 29. (Reuters – Continue Reading)

Read Gilead's CEO Letter Here

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