Overview:
Three deals need to be struck.
First, the Eurogroup of finance ministers needs to reach an agreement of proposals for joint action to the heads of state.
Second, oil producers need to cut output if prices are to stabilize.
Third, the US Congress needs to strike a deal to provide more funding. Investor seems hopeful, and risk appetites are have lifted equities. Markets in the Asia Pacific region outside of Japan and Taiwan rose, led by 3%+ gains in Australia and India. Europe's Dow Jones Stoxx 600 is pushing higher and has now met a (38.2%) retracement of this year's decline, while US shares are firmer, and the S&P 500 is closing in on a 50% retracement (~2793). Core bond yields are a little lower, with the US 10-year yield off three basis points to 0.74%. Peripheral bond yields are firmer, with Italy's benchmark yield rising six basis points. The dollar is mixed. The Scandis are leading the European currencies higher, while the dollar bloc and yen as nursing small losses. Gold is straddling the $1650 level while oil is firm but continues to consolidate pending new developments. Russia appears to have signaled that it could reduce its output by 1.6 mln barrels a day (~15%).
Asia Pacific
Singapore reported an infection spike. The re-opening of Wuhan that celebrated yesterday is looking more complicated as some restrictions have been tightened amid new flare-ups. In Tokyo, confusion undermined the efforts to impose a lockdown after Economic Minister Nishimura, who heads the government's response to the pandemic, asked governors to hold off decisions to shutter businesses until after the Abe government assessed the impact of individual requests for individuals to stay home. The state of emergency was to shut down about half the economy.
The Bank of Japan cut the outlook of all Japan's regions. The BOJ will meet later this month and update its forecasts. In his speech to the regional branches, Governor Kuroda did not discuss inflation, and this omission was seen as a signal that the official inflation forecast will be cut. In turn, this is a prerequisite to embolden the BOJ further to address the economic crisis. The preliminary estimate of a nearly 41% drop in March machine orders underscores expectations that the world's third-largest economy, which contracted in Q4, is contracting at a double-digit pace....
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....Europe.... MUCH MORE
Italy, which reports said yesterday, was considering how to unwind the national shutdown, has seen a rise in infections, and is now looking to extend the restrictions. Germany saw the largest increase in new cases in five days. Sweden, which is trying a different course to combat the infections, is being watched closely, though cases are still rising quickly.
The UK has taken a significant step today: The government announced it would boost the size of its bank account with the Bank of England. It is known as the "Ways and Means Facility" and usually is around GBP370 mln. It did not specify a new limit, and it effectively allows the government to spend more money in the short-term without having to issue more debt. During the Great Financial Crisis, the facility rose to about GBP20 bln. Economists call this "direct financing of the government." The Treasury insisted that the measures will be temporary and short-term, and assured that any overdraft would be repaid as soon as possible before the end of the year. Some observers are concerned that is may become permanent. Below the surface, there is likely tension with the Bank of England, as the new Governor (Bailey) seemed to rule out the use of the facility a couple of weeks ago.
ECB President Lagarde has taken to the op-ed pages to press the European governments into a strong and coordinated fiscal response....
On Wednesday Mr. Chandler did some vid with TD Ameritrade:
