Further emergency easing
Today’s news headlines:
‘European stocks head for steep falls despite Fed intervention’. Global stock markets came under pressure again on Monday despite central bank intervention to soften the blow from COVID-19. Overnight, central banks in the US, Japan, and New Zealand all eased monetary policy, but equity futures in Europe and the US pointed to another slide in major indices to start a new week after Asian stock markets fell. (Financial Times)
‘Europe’s recession inevitable as last line of defence crumbles’. Europe’s services sector – which makes up three-quarters of its economy – is likely to take a beating by the COVID-19 pandemic. Last year, Europe’s manufacturing sector took a severe downturn, but services helped keep the economy afloat. Now, with millions of people on lockdown, an expected services slump makes a European economic recession almost inevitable. (Bloomberg)
Today's events, rates, and data
Despite a 100 basis point interest rate cut by the Federal Reserve overnight, as well as other central banks easing policy, risk assets extended their decline with European equities opening 5% lower, and US Futures pointing to a similar move when New York opens. The Swiss Franc and Japanese Yen opened the week higher, and Treasury yields ticked lower.
Overnight, Chinese year-on-year Retail Sales and Industrial Production data showed a -20.5% and -13.5% contraction respectively.
G7 Finance Ministers and central bankers are meeting today via video link to continue international cooperation in dealing with the coronavirus pandemic. Policy announcements may be expected from the meeting.
The US Empire State Manufacturing Index is forecast to post a reading of 5.1, down from 12.9 previously. A print above 0.0 indicates improving conditions.