Morning 3-19

More QE, Interest rate Cuts, Fed action and of Course Limit Move in Spoos First the ECB announcement not a timid response by the Central bank:


ECB(~22.50 GMT): Announced a €750b pandemic emergency purchase programme (PEPP) which will cover private/public securities; will cease PEPP once it judges C-19 crisis phase has finished by not before yr end & will include all asset categories under existing APP; benchmark allocation across jurisdictions will continue to be the capital key; self-imposed limits might hamper action that the ECB is required to take in order to fulfil its mandate, the governing council will contemplate revising them if necessary; waiver of eligibility requirements for Greek gvt secured issuance will be granted for PEPP; fully prepared to increase the size of APP & adjust composition as much as necessary & for as long as needed

-ECB Pres Lagarde: There are no limits to or commitment to the EUR, determined to use full potential of our tools within our mandate; extraordinary times require extraordinary action

-ECB’s Villeroy: Bank will purchase more bonds if required; ECB are absolutely determined to fight fragmentation risk between EZ countries; if required we can temporarily focus on certain countries debt; no reason to close equity mkt’s; commercial paper mkt isn’t liquid enough, need to step up our action(ITC Markets)

Dax gaped open Higher but sold off,Not a good sign
BTPs gaped higher at one point +1000 Ticks,still +450

-The Fed continues to dust off the 2008 playbook even though the Circumstances are A bit different now but at least they are trying. The Fed will support Money market mutual Funds with a program designed to ease strains in short -term funding markets. (BBG)

Australia Surprised markets with an inter-meeting Cut …The cut cash rate to 0.25% from 0.5%; RBA will conduct longer term repos & provide markets with liquidity; targets 3 yield on A$ Govt bond ~ 0.25%; banks will have at least AUD 90b for funding/lending; stands ready to lends against SGS & SEMIS(ITC Markets)


RBA Gov Lowe: Expects OCR to remain at current level for some years, but not forever; doing all it can to lower funding costs & support the supply of credit to biz; RBA won’t be buying bonds directly from the gvt; expecting significant job losses as C-19 fallout hits; will maintain current rate setting until there’s a strong recovery in place; not able to provide updated sets of f/c’s; bond purchases depend on mkt conditions & PX; may take some time for yields to reach 0.25% (ITC)

• Indonesia, Philippines, Taiwan, Brazil all Cut rates
• BOJ offered to lend 2 trillion yen in unscheduled operation
• Israel may buy corp. Bonds, South Korea Will buy 1.5 trillion won of Gov’t. Bonds

Economic fallout begins:
-The Ifo Business Climate indicator for Germany tumbled 8.3 points from the previous month to 87.7 in March 2020, a preliminary estimate showed, the biggest drop since 1991 to the lowest level since August 2009


-According to sources: Roughly half of shale Co.’s will likely be restructured; they may see some form of assistance from the administration but not from Congress
Jobless claims F/C/ 220 vs 281 Philly fed F/C 8 vs -12.7

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