· CORONAVIRUS CRISIS:
Ø Total confirmed cases: More than 4,337,105
Ø Total deaths: At least 292,403
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 1,408,155 (+22,321) and deaths: 83,377 (+1,582)
Ø Spain cases: At least 269,520 (+1,377) and deaths: 26,920 (+176)
Ø Russia cases: At least 232,243 (+10,899) and deaths: 2,116 (+107)
Ø UK cases: At least 226,463 (+3,403) and deaths: 32,692 (+627)
Ø Italy cases: At least 221,216 (+1,402) and deaths: 30,911 (+172)
Ø Brazil cases: At least 177,602 (+8,459) and deaths: 12,404 (+779)
Ø Thailand cases: At least 3,017 (+2) and deaths: 56
· April consumer prices post the largest drop since 2008
U.S. consumer prices in April dropped by the most since the Great Recession, weighed down by a plunge in demand for gasoline and services, including airline travel, as people stayed home during the coronavirus crisis.
The Labor Department said on Tuesday its consumer price index tumbled 0.8% last month after falling 0.4% last in March. That was the largest decline since December 2008, and marked the second straight monthly decrease in the CPI.
· U.S. dollar slides ahead of Fed's Powell speech
The dollar fell on Tuesday as the mood turned cautious a day ahead of Federal Reserve Chairman Jerome Powell’s speech on economic issues and as investors weighed the chances of negative U.S. interest rates.
The dollar was not necessarily being driven by safe-haven factors, analysts said, given that U.S. stocks were down and Treasury prices were higher on the day.
“The dollar is still trading within broad ranges and its weakness today could be due to caution ahead of Powell’s speech tomorrow and especially given the current talk about negative interest rates,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
Although Powell and Fed officials have all but ruled out cutting interest rates below zero, several markets have started to price in such a cut. Fed funds futures on Tuesday priced in negative interest rates of about half a basis point in April 2021.
The rate options market implied a 23% probability that the key federal funds rate will fall below zero by end-December, BofA Securities data showed, citing short expiry options on one-year U.S. swap rates. That compares with a 9%-10% probability last week.
In afternoon trading, the dollar index was down 0.3% at 99.959 =USD.
The dollar edged lower after data showed U.S. consumer prices dropped 0.8% in April, the largest decline since December 2008 when the economy was in the throes of a recession and marking the second straight monthly decrease in the CPI.
Overall, analysts said risk-taking has been limited by persistent concerns about the global health crisis.
New cases of coronavirus infections have been found in China, South Korea and Germany, where respective governments have eased lockdown restrictions. A re-emergence of coronavirus cases could dent a global economic recovery on the back of an injection of monetary and fiscal stimulus.
The euro was last up 0.4% against the U.S. currency at $1.0848 EUR=EBS, though not far from the $1.0636 low touched at the end of March when the pandemic sent markets into turmoil.
The dollar fell 0.5% against the yen to 107.19
· Powell is expected to squash idea of negative rates, even as Trump says US would benefit
Federal Reserve Chairman Jerome Powell is expected to strongly oppose the idea of negative interest rates when he speaks Wednesday, though President Donald Trump Tuesday said they would be a benefit to the U.S.
Powell is expected to take the opportunity to talk down market speculation about negative interest rates, when he appears in a 9 a.m. ET webcast with the Peterson Institute for International Economics. For the first time ever, the fed funds futures market last Thursday priced in slightly negative rates starting this fall.
Since Friday, a number of Federal Reserve regional bank presidents, like Richmond Fed President Thomas Barkin and Chicago Fed President Charles Evans knocked the idea of negative rates and said the Fed has no plans for them. The futures market has since reversed some of the implied negative rates for the fall and winter, but April, 2021 futures still price the slightly negative rate of minus 0.01%.
But for Trump, faced with trillions in new debt, the idea of negative rates is appealing and he said the U.S. should do it as long as other countries are. The president has spoken in favor of negative rates previously, the idea being that investors would pay the Treasury to hold U.S. debt, instead of the other way around.
· Fed's Mester sees virus testing, treatments vital to economic recovery
More progress needs to be made on testing and treatments to control the coronavirus outbreak before people can feel safe and the U.S. economy can return to growth in the second half of the year, Cleveland Federal Reserve Bank President Loretta Mester said on Tuesday.
“A reasonable baseline outlook is that as some of the stay-at-home restrictions are lifted, the economy will begin to grow again in the second half of this year and unemployment will begin to move down,” Mester said in a speech delivered virtually to the CFA Society Chicago.
However, a more pessimistic scenario, in which a surge in cases requires businesses to shut down again or the crisis leads to more bankruptcies or instability in the banking sector, is “almost as likely” if the necessary conditions with testing and medical care do not fall into place, she said.
· The U.S. needs more fiscal help to fight coronavirus, Fed officials say
U.S. businesses and households are going to need more fiscal support to get through what will likely be a longer period of recovery from the coronavirus shutdown than initially expected, Federal Reserve policymakers said on Tuesday.
Unemployment will get worse around the country and the economic recovery will be uneven, they said.
U.S. unemployment is likely to peak at 20% or higher, and then to fall only to between 8% and 10% by year’s end, Dallas Federal Reserve Bank President Robert Kaplan told CNN International. The U.S. unemployment rate was 14.7% in April.
“There may well need to be more fiscal stimulus in order to boost economic growth so that we can grind down that unemployment and get closer to full employment,” Kaplan said.
· Los Angeles mayor hedges on plan to extend coronavirus lockdown for three months
The mayor of Los Angeles on Tuesday back-pedaled from his health director’s assertion that stay-at-home orders in America’s second-largest city would be extended at least through July, after those comments touched off a furor among beleaguered residents.
· UK retail sales plunge 19% in April as COVID lockdown hits: BRC
British retail spending plunged by nearly a fifth in April as the government’s coronavirus lockdown hammered the sector, and a broader measure of consumer spending tumbled by more than a third, surveys showed on Wednesday.
The British Retail Consortium said its members reported a 19.1% drop in total sales last month compared with April last year, the biggest fall since it began its monthly index in 1995.
Barclaycard, part of Barclays Bank (BARC.L), said credit and debit card spending plunged by 36.5% compared with a year earlier as spending on travel, pubs and restaurants collapsed.
British Prime Minister Boris Johnson shut down much of the economy and ordered people to stay largely at home in late March in an attempts to slow the spread of COVID-19.
· Investment banks cut jobs despite coronavirus trading surge: Coalition
Investments banks cut jobs at the fastest pace in six years during a first quarter in 2020 even though the coronavirus pandemic triggered a surge in volatility and boosted revenues to a five-year high, data published on Wednesday by research firm Coalition showed.
While investment banks have benefited from the short-term increase in trading, they are expected to be hit hard by a global recession triggered by the COVID-19 crisis and have already imposed hiring freezes.
In Britain for instance, the number of finance professionals seeking new jobs rose by more than 40% in the first quarter compared with the last three months of 2019.
Coalition’s data showed that the banks’ revenues from fixed income, currencies, and commodities had their strongest first quarter since 2015, surging 20% to 22.7 billion dollars, as the financial turmoil from the coronavirus crisis prompted a spike in trading.
· Oil jumps more than 6% as Saudi Arabia pledges further production cuts
Oil futures rose on Tuesday, boosted by an unexpected commitment from Saudi Arabia to deepen production cuts in June to help drain the glut in the global market that has grown as the coronavirus pandemic crushed fuel demand.
U.S. West Texas Intermediate crude futures climbed $1.64, or 6.8%, to settle at $25.78 per barrel. Brent crude futures climbed 35 cents, or 1.18%, to settle at $29.98 per barrel. The benchmark fell $1.34 on Monday.
Saudi Arabia said overnight it would cut production by a further 1 million barrels per day (bpd) in June, slashing its total production to 7.5 million bpd, down nearly 40% from April.
Reference: CNBC, Reuters
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