Via Mizuho (highlights my own) …. Headline of the day. “A ‘Buy Everything’ Rally Beckons in World of Yield Curve Control” Bloomberg. Global stocks gained $1.7tn in market cap last week on fresh central bank liquidity injections, with the ECB announcement of record €1.3tn TLTRO program and as the Fed released new details on its plan to buy corporate debt. Specs have built the largest ever short in e-mini S&P500 futures in notional position size, and the largest short since late 2011 in terms of the number of contracts, according to the latest Commitment of Traders report. Specs also sold Dow futures (15k), and that position is a record short in contract terms
. …. Bonds trade like yield curve control has already started. Pain trade remains to the upside. Mountain of cash on the sidelines. U.S. banks are ‘swimming in money’ as deposits increase by $2 trillion amid the coronavirus – CNBC. ….
Positive economic surprises abound. Gold prices have climbed to the highest since 2012. Credit leads equities. June is poised to become the busiest month ever for US junk-bond sales. The market has gone from broken to wide open in three months, “aided by our helicopter parents at the Federal Reserve.” – Bloomberg. …
.. Bloomberg also has an opinion piece from Former New York Fed President Dudley with this title “A `$10 trillion Fed balance sheet is coming Not too much of a surprise with it currently standing at $7trillion,article Hints that balance sheet could be $10T by year end Stimulus for everybody!
US futures higher rest of the World choppy sideways, the Teflon Don Stock market is back it appears, All European Bourses in the red with loses from Spain -1% ,Both Dax and Cac -.5%,15-19 Stoxx 600 sectors lower on day, and compare to Spoos +.8% nass +.9% all you can do is shake your head. Wire card in Germany -38% and Deutsche telecon -4%, Are your downside leaders Dollar index is trading a bit lower, but Chart patterns indicate that Short term trend is Higher, and all else equal should be a detriment to Risky assets. Gold almost touching most recent highs (Spot ),the contract now giving back all of the overnight gains trading near session lows, Oil down .5% but precious Metals acting like Spoos are in the red Silver +1.2%,Platinim +1.4% Copper acting like all is well in the world +.9%.Copper has been on a nice upside run of late one of the subtle bullish Undertones is Virus outbreak in Chile may impact production steady on the day. A very Light Econ calendar this week PCE numbers on Friday the highlight. A handful of Fed speakers watch for YCC comments.
From BBG “US Virus cases rose by 27K yesterday fatalities topped 119K Arizona cases Jumped by5.2% California; s was a Daily record brazil Death tool rose above 50K Mexico reported 1,044 deaths second highest daily total yet:
China suspends poultry imports from a Tyson plant… On Sunday, China suspended poultry imports from a Tyson Foods plant where hundreds of employees tested positive for Covid-19, raising concerns over the broader implications for U.S. and global meat exports.
China also ordered a PepsiCo factory to close on Sunday as authorities clamp down on the food industry amid a new coronavirus cluster in Beijing (ITC markets) …. Worries about Food imports.
China confirmed that a proposed national security law would allow Beijing to override Hong Kong’s independent legal system (pro farmer)
PBOC: leaves 1 & 5y LPS unch at 3.85% &4.65%; ING see targeted RRR cut later this week
RBA’s Lowe: would like to see a lower A$ at some point, not an issue now; virus will affect world economy for years ; Australia needs to reform otherwise will go along with mediocre growth; we will have a protracted period of risk aversion; doesn’t favour a target for unemployment(ITC)
BUBA’s Weidmann(FAZ 21 Jun): German economy has passed worst of crisis , now expected to recover gradually; state aid is a legit tool for boosting the economy to help healthy firms survive, but we can’t let the nation get dependent on public money; once economic situ changes, ECB needs to be ready to shift course; BUBA aims to be more transparent with GCC, wants the Bundestag to take initiative & invite me to have another dialogue(ITC)
Grassley expects next Covid-19 aid package will be cleared by August break… Senate Finance Committee Chairman Chuck Grassley (R-Iowa) said he believes that Covid-19 economic relief legislation will be approved by Congress before the August break although discussions in the Senate will not turn to that effort until after the July 4 break.(pro Farmer)
Big PPP borrowers to be revealed… Bowing to bipartisan pressure in Congress, the SBA and Treasury are releasing the names of borrowers who received Paycheck Protection Program (PPP) loans of $150,000 or more, accounting for about 73% of funds lent through the program (pro farmer)