Daily Archives: June 16, 2020

Yesterday, Bloomberg reported that the U.S. Federal Reserve said “it will begin buying individual corporate bonds under its Secondary Market Corporate Credit Facility, an emergency lending program that to date has purchased only exchange-traded funds.” The central bank also spelled out for the first time how it plans to implement its buying strategy. It will create a portfolio based on a broad, diversified market index of corporate bonds. According to the WSJ, “the index will be made up of all the bonds in the $9.6 trillion corporate debt market from companies that satisfy the program’s criteria, including that companies were investment-grade-rated as of March 22 and that securities can be no more than five years in duration.”

 

@federalreserve announces updates to the Secondary Market Corporate Credit Facility which will begin buying a broad and diversified portfolio based on an index of corporate bonds to support market liquidity & the availability of credit for large employers: https://t.co/pD6h1CpQhz

— Federal Reserve (@federalreserve) June 15, 2020

#Fed Will Begin Buying Broad Portfolio of Corporate Bonds – Bloomberghttps://t.co/4bC5aMzR39

— Christophe Barraud (@C_Barraud) June 16, 2020

 

In the meantime, the Federal Reserve Bank of Boston also announced that the Fed’s Main Street Lending Program opened for lender registration. Reuters highlighted that “the program, targeted at companies that were in good shape before the pandemic but may now need financing to retain workers and fund operations, will offer up to $600 billion in loans through participating financial institutions to U.S. businesses with up to 15,000 employees or with revenues up to $5 billion.”

 

The #FederalReserve today opened lender registration for the Main Street Lending Program. Eligible financial institutions are now able to register for the program via the program’s lender portal.

Learn more: https://t.co/3BN4msxX4W pic.twitter.com/zHVOeDxgo7

— BostonFed (@BostonFed) June 15, 2020

 

This morning, the Bank of Japan followed the Fed by revising upward the estimated size of its virus-response measures to 110 trillion yen, up from 75 trillion yen, while pledging to do more to help the pandemic-hit economy if needed.

 

The BOJ released the Statement on Monetary Policy after the June 15 and 16 Monetary Policy Meeting.https://t.co/GCQPgtkhoM pic.twitter.com/UqxE3EGMpi

— Bank of Japan (@Bank_of_Japan_e) June 16, 2020

#Japan | The #BOJ revised the estimated size of its Virus-response measures at 110 trillion yen ($1 trillion), up from 75 trillion yen, while pledging to do more to help the pandemic-hit economy if needed – Bloomberg pic.twitter.com/6HM5A1Dgrd

— Christophe Barraud (@C_Barraud) June 16, 2020

 

The focus will now shift to monetary policy meeting of the Bank of England. According to Bloomberg, “while the central bank is widely anticipated to focus on expanding its quantitative-easing program on Thursday, speculation is building that it will impose yield-curve control – a policy pioneered by the Bank of Japan – in the coming months.” All in all, the BOE is likely to implement another accommodative move following the ECB earlier this month. As a reminder, on June 4, the ECB intensified its response by expanding purchases by 600 billion euros to 1.35 trillion euros, and extending them until at least the end of June 2021.

 

Press release: Monetary policy decisions https://t.co/MmOdsWpzNn

— European Central Bank (@ecb) June 4, 2020

 

In a context where inflation expectations remain low in G7 countries and risks appear clearly skewed to the downside (2nd wave, trade war, hard Brexit, U.S. elections, geopolitical tensions, social unrests, financial risks such as CLOs, CMBS, etc.), central banks will remain very accommodative in 2H20. We should see another increase in G7 CBs combined balance sheet, well above the $20 trillion threshold.

 

Latest data confirmed #G7 CBs combined balance sheet kept climbing sharply in May (~$700Bn). pic.twitter.com/rXJGeObCtV

— Christophe Barraud (@C_Barraud) June 1, 2020

It turns out Robinhood investors timed the market well, and they also pick stocks well. But I still suspect this will end with the poor snatching losses for themselves that would otherwise have been suffered by the rich. https://t.co/5fzGpYjKYc via @bopinion pic.twitter.com/Vh1dVwRWAs

— John Authers (@johnauthers) June 16, 2020

BAML FMS Hedge Fund Exposure to the Equity Market…the chase is on. pic.twitter.com/S1JsqfWRGN

— LongConvexity (@LONGCONVEXITY) June 16, 2020

Pain trade is still up: Record net 78% of investors in BoAML Fund Manager Survey say stock market is "overvalued." Most since start of the series in 1998. pic.twitter.com/ckhhk73nmc

— Holger Zschaepitz (@Schuldensuehner) June 16, 2020

The @sentimentrader tech stocks Optimism Index's 50 day average is at its highest since… oh wait… January 2000

We all know how the next year played out for stocks (and tech in particular) pic.twitter.com/2Ky4ErAt6J

— Troy Bombardia (@bullmarketsco) June 16, 2020

A record breaking 56% of S&P 500 stocks are on a MACD sell signal now! pic.twitter.com/3cTCIKXXpK

— SentimenTrader (@sentimentrader) June 16, 2020

Americas

#Fed Will Begin Buying Broad Portfolio of Corporate Bonds – Bloomberghttps://t.co/4bC5aMzR39

— Christophe Barraud (@C_Barraud) June 16, 2020

#Trump Team Weighs $1 Trillion for #Infrastructure to Spur Economy – Bloomberghttps://t.co/fWwPVGeKGb

— Christophe Barraud (@C_Barraud) June 16, 2020

Chesapeake Energy to file for bankruptcy as soon as this week – sources – Reutershttps://t.co/c3XgMhBilC

— Christophe Barraud (@C_Barraud) June 16, 2020

Asia

#Japan | The #BOJ revised the estimated size of its Virus-response measures at 110 trillion yen ($1 trillion), up from 75 trillion yen, while pledging to do more to help the pandemic-hit economy if needed – Bloomberg pic.twitter.com/6HM5A1Dgrd

— Christophe Barraud (@C_Barraud) June 16, 2020

#Australia | #RBA Says Fiscal-Monetary Support Likely to Be Need for Some Time – Bloomberghttps://t.co/ZYIsiYkgYP

— Christophe Barraud (@C_Barraud) June 16, 2020

#China | Virus-hit #Beijing tightens outbound travel; #Shanghai demands quarantine – Reutershttps://t.co/jVILIlNNZd

— Christophe Barraud (@C_Barraud) June 16, 2020

#China | #Coronavirus: Next three days ‘crucial’ to contain #Beijing market outbreak – SCMPhttps://t.co/lZtsUcayOR

— Christophe Barraud (@C_Barraud) June 16, 2020

Abandoning Lockdown, #India’s Cases May Reach 800,000 in a Month – Bloomberghttps://t.co/OBPfCncaoQ

— Christophe Barraud (@C_Barraud) June 16, 2020

#NorthKorea Says It May Send Troops Into Parts of the #DMZ – Bloomberghttps://t.co/sqQgYywlVg

— Christophe Barraud (@C_Barraud) June 16, 2020

Europe

*DUTCH ECONOMY SEEN SHRINKING 6% IN 2020 IN BASE SCENARIO: CPB – BBG
*DUTCH ECONOMY TO GROW 3% IN 2021 IN BASE SCENARIO ESTIMATE: CPB

— Christophe Barraud (@C_Barraud) June 16, 2020

*U.K. RELEASES STATEMENT AFTER JOHNSON, VON DER LEYEN TALKS – BBG
*U.K. AND EU AGREE NEW MOMENTUM REQUIRED IN #BREXIT TALKS
*EU, U.K. CONFIRM NO EXTENSION TO POST-BREXIT TRANSITION
*EU-UK SUPPORT PLANS TO INTENSIFY TALKS IN JULY

— Christophe Barraud (@C_Barraud) June 15, 2020

#SWISS GOVT SEES GDP CONTRACTING 6.2% IN 2020, WORST SINCE 1975 – BBG
*SWISS GOVT SEES GDP GROWING 4.9% IN 2021

— Christophe Barraud (@C_Barraud) June 16, 2020