Stimulus

House Speaker Nancy Pelosi unveiled a $2.5 trillion spending bill as she attempts to take control of negotiations over the second stimulus package debate after the Senate failed to agree on measures yesterday. Pelosi’s plan includes measures to support home owners and renters, and would see $10,000 in loan forgiveness for student borrowers. There are no plans for the House to vote on the measures, which are seen as a list of Democrat demands for inclusion in the Senate bill. President Donald Trump, speaking at a press conference yesterday, said that he was looking to get the U.S. back to work as soon as possible as his administration becomes increasingly concerned about the economic damage caused by the virus.

PMIs

There are obvious signs of that damage in the purchasing managers indexes already published today. A gauge of activity in Japan’s service sector shrunk to 32.7, a record low. In Europe, a similar number for France crashed to 29, with manufacturing PMI there dropping to 42.9. There were also signs of a steep recession in German data, while a composite number for the euro area showed it may be headed into the biggest economic crisis in its history. March manufacturing, services and composite PMI numbers for the U.S. economy are also expected to show a sharp contraction when the data is released at 9:45 a.m. Eastern Time.

Lockdown

The U.K. finally joined most of the rest of Europe by imposing an almost complete lockdown, with Prime Minister Boris Johnson telling people that they must stay at home. The restrictions on movement seem to be effective in controlling the spread of the virus with Italy, the country with the largest outbreak in the region, reporting slower growth in the number of cases and deaths. Chinese authorities are preparing to lift the lockdown in Wuhan, the city where the outbreak was first reported earlier this year. In the U.S. there isn’t a national lockdown in place, but many states have introduced stay-at-home measures and travel has become curtailed.

Stocks rally

Global equity investors are reacting to unprecedented stimulus from the Federal Reserve, and possibly trying to get ahead of good news on controlling the coronavirus and fiscal packages today. S&P 500 futures hit the upper limit of their trading range after an Asian session which saw the regional benchmark gain 4.9%. In Europe, the Stoxx 600 Index was 5% higher at 5:50 a.m., with every industry sector gaining, led by a huge jump in energy stocks. The 10-year Treasury yield was at 0.812% and gold jumped.

Oil rises

The on-again, off-again possibility of a detente between the America and OPEC seems to be very much on again today after U.S. Energy Secretary Dan Brouillette said the possibility of a joint U.S.-Saudi oil alliance is one idea under consideration. That, coupled with the sweeping measures announced to support the economy by the Federal Reserve, is helping push oil higher for a second day, with a barrel of West Texas Intermediate for May delivery trading as high as $25. There are also growing signs that some producers do not have the firepower needed to fully engage with the price war, possibly meaning the expected flood of crude onto the market could be lower than feared.