· CORONAVIRUS CRISIS:
Ø Total confirmed cases: More than 4,253,802
Ø Total deaths: At least 287,250
Ø The coronavirus COVID-19 is affecting 212 countries and territories around the world and 2 international conveyances: the Diamond Princess cruise ship harbored in Yokohama, Japan, and the Holland America's MS Zaandam cruise ship.
Ø US cases: At least 1,385,834 and deaths: 81,795
Ø Spain cases: At least 268,143 and deaths: 26,744
Ø UK cases: At least 223,060 and deaths: 32,065
Ø Russia cases: At least 221,344 and deaths: 2,009
Ø Italy cases: At least 219,814 and deaths: 30,739
Ø Thailand cases: At least 3,015 (+6) and deaths: 56
· Dollar rises with yields as investors send mixed signals on risk
The dollar, which typically functions as a safe-haven investment, rose on Monday even as investors added risk to their portfolios, buying U.S. stocks and selling Treasury bonds.
Investors had mixed risk expectations, with an eye on warnings of a second wave of COVID-19 infections as more countries eased lockdown restrictions.
Germany reported on Monday that new coronavirus infections were accelerating exponentially after early steps to ease its lockdown, news that sounded a global alarm even as businesses ranging from Paris hair salons to Shanghai’s Disneyland re-opened. South Korean infections also rebounded to a one-month high.
Japan said on Monday it could end its state of emergency in many regions this week and New Zealand said it could ease restrictions on Thursday. The UK has also set out plans to ease the lockdown, while in France shops re-opened on Monday.
“Market concerns of re-opening the economy too quickly resulting in another wave of the virus should continue to keep investors cautious,” wrote analysts at Action Economics.
However, “It’s not a classic risk-off environment,” said Axel Merk, president and chief investment officer at Merk Investments.
On one hand, Merk noted, there is evidence of a risk-off move. The dollar index =USD, which measures the currency against a basket of six rivals, was 0.37% stronger on Monday at 100.16. The Swiss franc, another safe haven, rose against the euro EURCHF= to a more-than two-week high.
The yield on the U.S. 10-year Treasury bond rose to 0.7036%.
Meanwhile, the Japanese yen, a classic safe-haven bet, was broadly weaker. Against the dollar, the yen JPY= was last down 0.93% at 107.62 and was also 0.69% weaker against the euro EURJPY=, at 116.38. Prices of U.S. Treasury bonds, which are also high-quality assets that benefit in times of crisis, fell and yields rose as demand sank.
The euro fell against the dollar and was last down around 0.26% at $1.081 EUR=.
The dollar this week will take its cues from Federal Reserve Chair Jerome Powell’s speech on Wednesday and inflation, jobless and retail spending data, according to Joe Manimbo, senior market analyst at Western Union Business Solutions.
· Fed's Evans sees no inflation risk, and no use for negative rates
Chicago Federal Reserve Bank President Charles Evans on Monday said he sees interest rates staying near zero for “quite some time” to support the economy, but does not expect to resort to negative interest rates as central banks in other countries have done.
Evans also said a rise in inflation is unlikely over the next several years, and that with interest rates as low as they are, it is the right time for the federal government to borrow and spend to support businesses, households and local governments.
“I anticipate that interest rates are going to be low for quite some time,” Evans said at a virtual meeting of the Lansing Chamber of Commerce. The federal government is engaged in dramatic deficit spending, but with rates low, “this is the time to go out and borrow and engage in activities which have very high social rates of return in order to benefit the American people.’
· Fed’s Quarles says U.S. banks, Fed may need to do more in crisis
U.S. banks are “well-positioned” to support households and businesses during the coronavirus crisis, a top U.S. central banker said on Monday, lending to creditworthy firms, processing transactions and helping, as conduits for U.S. government economic support, to stabilize financial markets.
The banks may yet need to do more, Federal Reserve’s Vice Chair for Supervision Randal Quarles told the Senate Banking Committee in prepared remarks, and their health will depend on the health of the economy as a whole which in turn depends on the public health response to the pandemic.
At the Fed, he said, “more may be required of us before the current crisis ends. We can only pledge to do what this moment demands.”
· UK economy may need to adapt if virus vaccine takes time: Johnson
Britain will need to think about how its economy can adapt if a vaccine for the novel coronavirus does not emerge quickly, Prime Minister Boris Johnson said on Monday.
“If we can’t get a vaccine fast, we’re going to have to think a lot more about how we make our businesses, our lives, COVID secure whilst continuing with economic activity,” Johnson told reporters.
He added that he had no doubt the British economy would bounce back.
· France emerges cautiously out of coronavirus lockdown
France tiptoed out of its strict coronavirus lockdown on Monday, allowing non-essential shops, factories and other businesses to reopen for the first time in eight weeks to help resuscitate the economy despite the risk of a second wave of infections.
With the world’s fifth highest official death toll, France is also reopening schools in phases and its 67 million people can now leave home without government paperwork, although documentation is still needed for rush-hour travel around Paris.
Theatres, restaurants and bars will remain closed until at least June with authorities wary of the peril of new outbreaks emerging - highlighted by a scramble in South Korea to contain a cluster of cases linked to nightclubs.
· Italy to give regions powers to roll back coronavirus lockdown
The Italian government said on Monday it would give the regions the power to roll back restrictions introduced to halt the new coronavirus in a move that is likely to see most remaining curbs lifted next week.
· Oil prices settle lower, even as Saudi Arabia announces additional June output cut
Oil futures ended lower on Monday, as a slump in demand for crude outweighed support from a move by Saudi Arabia and other major oil producers to further cut output in June.
West Texas Intermediate crude for June delivery CL.1, 0.95% CLM20, 0.95% on the New York Mercantile Exchange lost 60 cents, or 2.4%, to settle at $24.14 a barrel after touching an intraday low of $23.67. The front-month contract rose 25.1% last week, according to Dow Jones Market Data.
Global benchmark July Brent crude BRNN20, 0.88% saw a late change to its settlement on ICE Futures Europe on Monday, losing $1.34, or 4.3%, to settle at $29.63 a barrel. Brent last week logged a 17.1% weekly climb.
Saudi Arabia’s energy ministry directed Saudi Aramco to reduce its crude-oil production by an extra, voluntary 1 million barrels per day beginning in June, a Saudi Ministry of Energy official told the Saudi Press Agency, according to news reports.
The move brings the total Saudi output cut to around 4.8 million barrels per day from the April production level, the SPA reported. Saudi oil production for June, with the output-cut agreement between the Organization of the Petroleum Exporting Countries and its allies as well as the voluntary cuts, will total 7.492 million barrels per day, it said.
OPEC and its allies, collectively known as OPEC+, agreed last month to reduce daily output by 9.7 million barrels per day from May 1 through June.
Reference: CNBC, Reuters
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