In the U.S. death from all-causes is dropping quite quickly as people stop doing dangerous things like, well, going outside. I bet deaths by lightning strike will approach record lows this spring.
Anyhoo, from Marc to Market:Weekly deaths in the US down by 7,000 - 10,000 for the week ending March 7 2020! Silver lining with people changing their behaviors during COVID-19? Raw weekly death numbers taken from @CDCgov: pic.twitter.com/Y7tzG5TSTU— Siddhartha Sanghi (@SidSanghi) March 29, 2020
Overview:....MUCH MORE
Risk appetites remain in check as the spread of the coronavirus is leading to more and longer shutdowns.
Asia Pacific equities fell with Australia, the notable exception. Its benchmark rallied a record 7%, encouraged by additional stimulus measures. Led by financials, following new that the ECB is requesting banks hold off dividend payments until October (which frees up an estimated 30 bln euros), real estate, and consumer discretionary sectors, the Dow Jones Stoxx 600 is off by a little more than 0.5% in late morning turnover. US shares are flat to slightly higher. Benchmark 10-year yields are mostly lower, led here too by Australia's 14 bp decline (to about 75 bp). The UK Gilt market shows little response to the pre-weekend downgrade, and the 10-year yield is off eight basis points, the most in Europe. Core European yields are 3-6 bp lower, while Italy's 10-year yield is about nine basis points higher. The US benchmark yield is off four basis points near 0.63%. The dollar is firm against most major currencies, but the Japanese yen, and most emerging market currencies, but a small handful of Asian currencies, including the Chinese yuan. The South African rand is off a little more than 1%, and the 10-year yield is up about 12 bp (~11.70%) following the pre-weekend downgrade by Moody's to below investment grade. Now all three of the major rating agencies have taken away its investment-grade status. Gold is softer alongside equities, while May WTI briefly dipped below $20 a barrel.
Asia Pacific
Japan is putting together extra budget days after the budget for the new fiscal year, starting April 1, was approved. The news measures are expected by the middle of next week. It will be funded by as much as JPY16 trillion in new debt, on top of the JPY129 trillion in the FY20 budget. The new bond issuance will be across the maturities, except for the 40-year bond and inflation-protected securities.
The PBOC injected CNY50 bln (~$7 bln) into the banking system via what it calls seven-day reverse repos (which is an injection of cash for securities that will be unwound in seven days) at 20 bp lower rate to 2.2%. Many observers see this as a prelude to a substantial cut in the benchmark one-year Loan Prime Rate (set via a survey of banks on the 20th of every month). The PBOC defied expectations and left the LPR unchanged ten days ago. Separately, the PBOC continued to set the dollar's reference rate weaker than the bank models suggest. Today's reference rate was set at CNY7.0447, while the median bank model (according to Bloomberg) was CNY7.0522.
Singapore eased monetary policy, as it does through its exchange rate guidance. Earlier today, the Monetary Authority of Singapore lowered the midpoint of its currency band and brought the slope to zero. The clear implication is that MAS is accepting a weaker currency. The move was not unexpected following last week's news that the economy contracted more than 10% quarter-over-quarter in Q1, and the government unveiled a second stimulus package (SGD48 bln or ~$33.5 bln).
The dollar eased to around JPY107.10 in the Asian session after finishing last week just below JPY108.00. The JPY107.70 area corresponded to a (38.2%) retracement of the rally from the March 9 low near JPY101.20 to the recent high of about JPY111.70. The next retracement (50%) is found near JPY106.45. The session high was set in early Europe around JPY108.25. Resistance is seen by JPY109.00. The Australian dollar is trading in the upper end of its pre-weekend range and has not been bid through $0.6200, where the 20-day moving average is found. In both Asia and early Europe, support near $0.6115 held.
Europe
Reports suggest that 14 of the 19 eurozone members endorse a common intergovernmental bond to finance expenditures linked to the coronavirus. This is an issue that will not be decided by a majority or a qualified majority. It a decision that requires unanimity, and it will not be forthcoming. Many of the same people, institutions, and countries that sought a joint bond in the sovereign debt crisis a decade ago are pushing for it again, but the creditors remain unconvinced. The European Stabilization Mechanism (ESM) and the European Investment Bank (EIB) issue bonds for which there is a shared responsibility. It is not clear what specific problem a new joint bond would address besides being seized upon as an opportunity to advance the federalist agenda. A compelling case would have to entail a demonstration, not merely an assertion that monetary union itself is at risk and that a joint bond is the only solution. It still seems to be a "nice-to-have" rather than a "must-have."
Fitch cut the UK's sovereign rating before the weekend to AA- with a negative outlook....
