· Coronavirus Updates:
→ Total confirmed cases: More than 118,907
→ Total deaths: At least 4,270
→ The coronavirus COVID-19 is affecting 116 countries and territories around the world and 1 international conveyance (the Diamond Princess cruise ship harbored in Yokohama, Japan).
→ US cases: At least 975 (+271), and deaths: 30 (+4)
→ Italy cases: At least 10,149 (+977), and deaths: 631 (+168)
→ South Korea cases: At least 7,513 (+35), and deaths: 58 (+5)
→ Iran cases: At least 10,149 (+977), and deaths: 631 (+168)
· Trump pitched 0% payroll tax rate for the rest of the year, White House official says
President Donald Trump, in a meeting with Republican lawmakers Tuesday on Capitol Hill, pitched a 0% payroll tax rate for employers and employees that would last through the rest of this year, a White House official told CNBC.
There was also discussion of making the payroll tax rollback permanent, said the official, who declined to be named. Payroll taxes are used to fund Medicare and Social Security. When asked about the potential cost of a payroll tax cut, the official pushed back and asked why there is always a focus on the cost of tax cuts.
Earlier Tuesday, CNBC reported that the White House was not ready to roll out a specific plan of action on the economy while the deadly coronavirus spreads. Trump stunned people in the White House on Monday, according to officials, when he said that he would announce economic policy proposals at a news conference Tuesday.
A press briefing with the White House coronavirus task force is slated for 5:30 p.m. ET Tuesday, according to Trump’s official schedule. The White House has also invited Wall Street executives to a meeting Wednesday to discuss an economic response to the coronavirus’s impact.
Trump, who faces a bitter reelection fight this year, mentioned the possibility of a payroll tax cut Monday evening. He has said he wants to help out the airline and cruise industries, as well, while fear of the virus and travel restrictions have crushed demand for tourism and business travel.
Republican senators have reportedly been skeptical of a payroll tax cut, which has been pushed by Peter Navarro, one of Trump’s leading advisors on trade policy.
Payroll taxes are paid by employers and employees. They are used to fund Social Security, Medicare and other government programs. For Social Security, employee wages are subject to a 6.2% tax up to $137,700. Workers pay a Medicare tax of 1.45%. Employers match what employees contribute by kicking in 6.2% toward Social Security and 1.45% for Medicare.
· US dollar recovers vs yen, Swiss franc, buoyed by stimulus hopes
The dollar rallied on Tuesday after huge losses against the safe-haven Japanese yen and Swiss franc, amid investor hopes that global monetary policymakers will make further stimulus efforts to mitigate the economic impact of the coronavirus outbreak.
The greenback’s recovery coincided with a rebound in the U.S. stock market and bounce in Treasury yields across the board, following U.S. President Donald Trump’s announcement that he would hold a news conference on Tuesday about economic measures in response to the virus. Indications of further stimulus efforts by some governments helped reverse some of Monday’s gyrations, but at 104 yen per dollar the Japanese currency was not back above the 105 seen before this week.
Against a basket of currencies, the dollar rose 1.5% to 96.36. It rose 2% against the yen to 104.46, considerably higher than Monday’s 101.18 low.
The yen also fell against the euro and the Australian dollar, after Bank of Japan officials indicated they were ready to ramp up stimulus if necessary, before a policy meeting next week.
The euro dropped 0.8% versus the dollar to $1.1354, down from $1.1495 on Monday, its strongest since early January. The dollar rose 0.9% against the Swiss franc to 0.9332 franc on Tuesday, recovering after three days of heavy selling pushed it to its lowest in almost five years.
Data suggest the Swiss National Bank is now intervening to weaken its currency. Sterling, meanwhile, fell 0.7% versus the U.S. currency to $1.3020.
Volatility has doubled in FX markets from the levels of late February, reaching its highest since early 2017, according to one index.
Analysts said FX volatility, which has not jumped to the same extent as in equity markets, could rise further. Commodity-linked currencies that tumbled on Monday following the crash in oil prices recovered slightly.
- Investors sought out on Monday safer assets amid additional fears that the coronavirus will disrupt global supply chains and tip the economy into a recession. The yield on the benchmark 10-year Treasury note dropped below 0.5% for the first time ever, while the 30-year rate breached 1%. At one point early Monday, the 10-year slid to 0.318%.
Treasury yields rebounded on Tuesday, with the 10-year rate hovering above 0.6% while the 2-year yield traded at 0.48%. The 30-year bond yield climbed back above 1% to trade at 1.133%.
· Australia consumer sentiment falls to five-year low: survey
A measure of Australian consumer sentiment slid to its lowest in more than five years this month as the mounting impact of the coronavirus shook confidence in the economic outlook, at least for the near term.
Wednesday’s survey showed the Melbourne Institute and Westpac Bank (WBC.AX) index of consumer sentiment fell 3.8% in March, more than reversing February’s 2.3% bounce.
The index was down 7.0% from a year earlier and, at 91.9, the lowest since December 2014.
The biggest impact was on the survey’s measure of the economic outlook for the next 12 months, which dived 12.8%. Yet the outlook for the next five years eased by only 1.3%.
The measure of family finances compared with a year ago actually rose 1.8%, while the outlook for the year ahead dipped 1.7%.
· Saudi Arabia, Russia raise stakes in oil production standoff
Saudi Arabia said on Tuesday it would boost its oil supplies to a record high in April, raising the stakes in a standoff with Russia and effectively rebuffing Moscow’s suggestion for new talks.
The clash of oil titans Saudi Arabia and Russia sparked a 25% slump in crude prices on Monday, triggering panic selling on Wall Street and other equity markets that have already been badly hit by the impact of the coronavirus outbreak.
Oil prices LCOc1 recovered some ground on Tuesday, but were still 40% down on the start of the year.
U.S. President Donald Trump spoke with Saudi Crown Prince Mohammed bin Salman in a call on Monday to discuss global energy markets, the White House said on Tuesday.
Trump is seeking re-election this year and will benefit from lower gasoline prices at the pump. But the U.S. government will also be concerned by the potential for bankruptcies in the U.S. shale industry, which plays an increasingly important economic role.
Several U.S. oil firms said on Tuesday they would cut spending and dividends.
· Oil jumps more than 10% one day after sharpest decline since 1991, amid hopes for continued OPEC talks
Oil prices surged on Tuesday following reports that ongoing talks between OPEC and its allies, known as OPEC+, remain possible. The move came despite a possible increase in production from Saudi Arabia and Russia.
Speaking to reporters Tuesday, Russian Energy Minister Alexander Novak said that Moscow had not ruled out measures with OPEC to stabilize oil markets, according to Interfax news agency. Russia’s energy ministry has proposed holding a meeting with Russian oil companies on Wednesday, Reuters reported, citing two unnamed sources.
International benchmark Brent crude gained $2.86, or 8.3%, to settle at $37.22 per barrel, while U.S. West Texas Intermediate futures surged 10.38%, or $3.23, to settle at $34.36 per barrel.
Tuesday’s jump follows steep declines on Monday, which which saw WTI and Brent drop 24% for their worst decline since 1991. Both contracts closed at a more than 4-year low.
Saudi Aramco CEO Amin Nasser said on Tuesday that the kingdom plans to supply a record 12.3 million barrels per day (bpd) in April, well above current production level of 9.7 million bpd.
In response, Novak said that Russian oil companies may boost output by up to 300,000 barrels per day, according to a report from Reuters, while noting that the country has the ability to increase production by as much as 500,000 barrels per day.
This potential oversupply comes at a time when oil prices were already moving lower after the coronavirus outbreak and subsequent travel slowdown has led to soft demand for crude.
Reference: Reuters, CNBC, Worldometers
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