Archives of “May 2020” month

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Here is what’s ahead for the proposed €500bn Recovery Fund (a rocky road)

  
  Analysis

Germany and France have put their hands up in agreement to the support the €500bn Recovery Fund

The path ahead for getting approval is a rocky one though:
  • will require unanimous support of the rest of the 27 EU members
If it gets that far:
  • funds would be raised by the European Commission
  • they’d borrow on capital markets
  • then disburse the funds to nations as needed (provided as grants, not loans)
Giving the cash away, net lending it, is a sticking point, so far, for Austria, the Netherlands, Denmark, Sweden (and perhaps others).
Nevertheless, the support from the big two was enough to help risk along on Monday:

Coronavirus ICYMI: 108 million people in Jilin province, China, back in lockdown

  
  Analysis

China’s northeast region province of Jilin is back under lockdown conditions due to a fresh outbreak of a COVID-19 cluster

Jilin province cities
  • trains and buses cut
  • schools shut
  • quarantine restrictions again on people in certain districts
The cluster numbers 34 infections so far (that is a dated number).
Expect this sort of news to continue as ‘second wave’ infections take hold around the globe.

China's northeast region province of Jilin is back under lockdown conditions due to a fresh outbreak of a COVID-19 cluster

China confirms 80% tariff on Australian barley

  
  Analysis
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The news that China was to impose an import tariff on Australian barley broke back on May 10

The tariff imposition has been announced in a statement from China’s Ministry of Commerce
  • anti-dumping tariff would be 73.6 per cent
  • while the anti-subsidy tariff would be 6.9 per cent
  • will remain in place for five years
This from China is in retaliation for Australia leading calls for an investigation into the origin and spread of COVID-19. China also halted imports of Australian beef last week as part of their response.
 The news that China was to impose an import tariff on Australian barley broke back on May 10 

Fed’s Powell says will keep interest rates low until economy on track to hit goals

  
  Analysis

Chair of the Federal Reserve Powell comments from text prepared for his hearing before the Senate Banking Committee.

Nothing new from Powell in these remarks.

  • “We are committed to using our full range of tools to support the economy in this challenging time even as we recognize that these actions are only a part of a broader public-sector response”
  • “We expect to maintain interest rates at this level until we are confident that the economy has weathered recent events and is on track to achieve our maximum-employment and price-stability goals.”

—

Powell is scheduled to appear in the virtual hearing at 10 am Tuesday in Washington

  • US Treasury Secretary Steven Mnuchin will also appear

Chair of the Federal Reserve Powell comments from text prepared for his hearing beforethe Senate Banking Committee.

European shares end the session with strong gains

  
Analysis, Global Indices

German DAX surges by 5.6%

the major European indices have gotten a big boost to the upside with help late in the day by the German Franco proposed reconstruction plan.
The numbers are showing:
  • German DAX, +5.67%
  • France’s CAC, +5.25%
  • UK’s FTSE, +4.3%
  • Spain’s Ibex, +4.5%
  • Italy’s FTSE MIB +3.32%
  • Portugal’s PSI 20+4.4%
All indices are closing near highs for the day.
In the European debt market, yields were mixed as investors shun the safer countries i.e. Germany, France, UK, and poured money into the riskier (risk on) countries led by Italy with a -19 basis point decline.
German DAX surges by 5.6%
In other markets as London/European traders look to exit:
  • spot gold has reversed sharply lower and currently trades down $9.10 or -0.52% at $1734.50
  • WTI crude oil futures are rising sharply with the July contract up $3 or 10.09 percent at $32.44
In the forex, the US dollar has moved sharply lower in the New York morning session. The JPY remains the weakest of the majors as JPY pairs soar on risk on sentiment. The NZD and the AUD continues their run to the upside, and are the strongest of the majors.  The NZDJPY is up near 2% on the day and is the biggest mover the day.

Moderna reports ‘positive data’ on early-stage coronavirus vaccine trial

  
  Analysis
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Just about everyone is making vaccine progress these days

It is tough to try and make sense of the developments of a coronavirus vaccine when we are trading on whatever the companies are telling us, rather than the science of it. But hey, that’s what happens when you don’t have that medical/biotech background.
In a statement today, Moderna is saying that it has had ‘positive data’ from its early-stage human trial for a coronavirus vaccine. Shares are jumping by more than 10% in pre-market as the company reports on their progress and this is also lifting general sentiment.
According to reports, the vaccine helped to produce coronavirus antibodies in all 45 participants of the trial. From a report by CNBC:

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