· Dollar dips after rise in US retail sales
The safe-haven U.S. dollar fell modestly in morning trading on Thursday after domestic retail sales data for June came in better than expected, though the move was limited by jobless claims and a drop in U.S. equities.
Retail sales in June increased for the second consecutive month, according to a report from the Commerce Department. The U.S. dollar index, which measures the currency against a basket of six rivals, was last down0.07% to 95.940.
A separate report from the Labor Department on Thursday showed 1.3 million people filed for state unemployment benefits during the week ending July 11, slightly down from 1.31 million in the prior period. The report nevertheless showed that a resurgence in new COVID-19 cases was chipping at the budding recovery.
The euro was little moved by the outcome of the European Central Bank meeting, last trading up 0.10% to $1.142.
The meeting was seen as something of a non-event by analysts, who said it was overshadowed by the EU summit, at which European countries are expected to vote on a 750 billion euro ($856 billion) recovery fund to revive euro area growth.
· ECB opts to wait and see, leaves rates and stimulus program unchanged
The European Central Bank opted Thursday to keep its interest rates and emergency coronavirus stimulus program unchanged, while it monitors the economic strength of the euro zone.
It said it would continue with its massive stimulus program announced in March to mitigate the economic shock from the pandemic. Last month, it expanded its Pandemic Emergency Purchase Program by 600 billion euros, bringing the size of the stimulus program to 1.35 trillion euros ($1.54 trillion) to be deployed until June 2021, or until the bank believes the crisis is over.
In a statement accompanying the decision Thursday, the central bank said asset purchases under PEPP would continue to be conducted in a “flexible manner” over time, across asset classes and jurisdictions. The interest rate on its main refinancing operations stands at 0%, and the interest rates on its marginal lending facility and deposit facility remain at 0.25% and -0.50% respectively.
The ECB expects rates to remain at their “present or lower” levels until it has seen the inflation outlook “robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.”
The euro was little changed against the dollar following the decision, hovering at around $1.14.
· Fed kicks off Main Street lending, balance sheet tops $7 trillion
The U.S. Federal Reserve’s stash of bonds and other assets rose for the first time in more than a month, even as many of its emergency lending facilities continued to get little use and a new lending program designed to help small and medium-sized companies hurt by the coronavirus crisis got off to a slow start.
The Fed’s total balance sheet size rose to $7.01 trillion as of July 15 versus $6.97 trillion a week earlier, data released by the central bank on Thursday showed. It was the first increase since June 10, and was largely due to continued purchases of Treasuries and mortgage-backed securities aimed at keeping financial market conditions easy.
· U.S. Fed buys $22.7 billion of mortgage bonds, sells none
The Federal Reserve bought $22.686 billion of agency mortgage-backed securities in the week from Jul. 9 to Jul. 15, compared with $21.685 billion purchased the previous week, the New York Federal Reserve Bank said on Thursday.
In a move to help the housing market begun in October 2011, the U.S. central bank has been using funds from principal payments on the agency debt and agency mortgage-backed securities, or MBS, it holds to reinvest in agency MBS.
· NY Fed's Williams says it could take time to dig economy out of 'very deep hole'
It could take a few years for the U.S. economy to recover from the damage caused by the coronavirus pandemic, and it is not yet the time to think about raising interest rates, New York Fed President John Williams said on Thursday.
“This is not the time to think about liftoff or normalization,” Williams said during an interview with Yahoo Finance.
The virus has created an “enormous amount of uncertainty” and even if the U.S. economy begins to recover in the second half of 2020, it may take some time for the economy to come out of a “very deep hole.”
· Fed's Evans signals little reason to raise rates for years
There’s little reason for the Federal Reserve to raise interest rates until inflation rises above the Fed’s 2% target, Chicago Federal Reserve Bank President Charles Evans said on Thursday, noting that he expects low inflation to be a problem for the next few years.
Evans forecast U.S. unemployment to fall only to 6.5% by the end of next year, well above the 4.5% most Fed policymakers see as consistent with full employment.
Even if unemployment falls below 4%, experience has shown that inflation won’t respond by surging, Evans said.
· Coronavirus live updates: Florida faces remdesivir shortages, Republicans cap convention size
Coronavirus data has already disappeared after Trump administration shifted control from CDC
Previously public data has already disappeared from the Centers for Disease Control and Prevention’s website after the Trump administration quietly shifted control of the information to the Department of Health and Human Services.
Since the pandemic began, the CDC regularly published data on availability of hospital beds and intensive care units across the country. But Ryan Panchadsaram, who helps run a data-tracking site called Covid Exit Strategy, said that when he tried to collect the data from the CDC on Tuesday, it had disappeared.
“We were surprised because the modules that we normally go to were empty. The data wasn’t available and not there,” he said. “There was no warning.”
· Dr. Anthony Fauci pleads with young people: ‘you’re propagating the pandemic’
White House coronavirus advisor Dr. Anthony Fauci urged young Americans to not take the coronavirus lightly, saying doing so could propagate the pandemic.
“You have to have responsibility for yourself but also a societal responsibility that you’re getting infected is not just you in a vacuum. You’re propagating the pandemic,” Fauci, director of the National Institute of Allergy and Infectious Diseases, told Facebook CEO Mark Zuckerberg in an interview Thursday evening.
The comment by Fauci came as state health officials say more young people are ignoring social distancing measures and contracting the virus at a higher rate. Fauci said the average age of a new Covid-19 patient has dropped by 15 years since the beginning of the pandemic in the U.S.
Vice President Mike Pence warned last month that roughly half of the new cases in the U.S. were people under the age of 35, particularly in Florida and Texas.
· China's central bank chief urges IMF to open cash floodgate to fight pandemic
China’s top central banker has urged the International Monetary Fund (IMF) to issue hundreds of billions of dollars of liquidity to its 189 member countries through a general allocation of Special Drawing Rights (SDRs) despite U.S. objections.
Yi Gang, governor of the People's Bank of China, wrote in an opinion piece here in the Financial Times that an issuance of SDRs - the IMF's internal monetary unit - is needed to help countries to contend with the COVID-19 pandemic.
· China slams U.S. response to Hong Kong security law as 'gangster logic'
China accused the United States of “gangster logic” after U.S. President Donald Trump ordered an end to Hong Kong’s special status under U.S. law in response to Beijing’s imposition of new security legislation on the former British colony.
· Oil drops 1% OPEC+ agrees to ease output curbs
Oil prices fell on Thursday after OPEC and other producers including Russia agreed to ease record supply curbs from August, though the drop was cushioned by tightening global inventories as economic activity picks up.
Brent crude fell 45 cents, or 1%, to $43.35 per barrel. West Texas Intermediate crude settled 45 cents, or 1.09%, lower at $40.75 per barrel.
Both contracts rose 2% the previous day after a sharp drop in U.S. crude inventories.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, agreed on Wednesday to scale back oil production cuts from August.
Reference: CNBC, Reuters
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