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Stocks are higher this morning after U.S. Fed announcement

Stocks are higher this morning after U.S. Fed announcement 981 980 Realm

The U.S. Federal Reserve said it will extend its bond buying program and begin buying individual corporate bonds. Investors have switched focus today from coronavirus worries to central bank action and stock-markets have rallied strongly. 

 

Global Macro

  • The Federal Reserve said that it will update its secondary market corporate credit facility, purchasing individual corporate bonds that have remaining maturities of five years or less. The facility, which started buying shares of exchange-traded funds in mid-May, was meant to improve market functioning in the light of the coronavirus pandemic. The Federal Reserve left the target range for its federal funds rate unchanged at 0-0.25% on June 10th 2020 as expected. Policymakers reiterated they are committed to using a full range of tools to support the US economy in this challenging time.
  • The Baltic Exchange’s main sea freight index continued the upward momentum in June, strengthening above 950 for the first time since January 2nd, amid rising demand for Panamax, Capesize and Supramax segment vessels as economies continue to gradually relax lockdown restrictions. The Baltic Capesize index rose to its highest since December 24th, after China’s crude steel output hit a new record high in May. The Baltic Dry index had slumped to below 400 points for the first time in more than four years in the week ended May 15th as the coronavirus-led global lockdowns hit demand and movement of freight.
  • Imports to the Euro Area fell 24.8% from a year earlier to EUR 133.7 billion in April 2020, the lowest since August 2014, as the coronavirus pandemic forced non-essential businesses to close and consumers to stay at home. Purchases were down for machinery & transport equipment (-30.6%), miscellaneous manufactured articles (-31.0%), mineral fuels, lubricants & related materials (-56.2%), manufactured goods classified chiefly by material (-12.2%), food & live animals (- 4.2%) and crude materials, inedible, except fuels (-14.4%).
  • Exports from the Euro Area tumbled 29.3% from a year earlier to EUR 136.6 billion in April 2020, the lowest level since February 2011, as the coronavirus outbreak hit global demand. The biggest declines were recorded for machinery & transport equipment (-43.1%), manufactured goods classified chiefly by material (-32.4%), miscellaneous manufactured articles (-37.8%), mineral fuels, lubricants & related materials (-60.0%) and crude materials, inedible, except fuels(- 25.6%).
  • On Monday: European stocks edged lower after China as well as the U.S. states of Texas and North Carolina reported rising number of coronavirus infections during the weekend. US stocks showed a substantial turnaround over the course of the trading session after moving sharply lower at the open. The major averages all climbed well off their early lows and firmly in positive territory. Asian stocks fell sharply after Beijing recorded a spate of new Covid-19 cases in a major wholesale food market, raising worries about a second wave of coronavirus infections. Weaker than expected retail and industrial production data from China also dented sentiment.
  • Monday’s data below:

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