By Lorcan Roche Kelly
The House is set to pass the $2 trillion stimulus package today and send it to the White House for President Donald Trump’s signature. The breakneck speed of the economic slowdown means that programs aimed at helping businesses and the newly unemployed need to get out the door in weeks, not months. The rules governing the largest portion of the aid, directed at corporations as well as state and local government, are still a work in progress. Doubts also remain over Trump’s call to have the money targeted at individuals delivered within two weeks.
The number of coronavirus cases in the U.S. passed the record set by China, with the American tally topping 82,000. The growth in the infections in China has nearly ground to a halt, with most of the new cases from overseas travelers prompting the government there to halt almost all foreigner arrivals. The leaders of the two countries pledged to cooperate in the fight against the outbreak. Meanwhile in Europe, government leaders struggled to agree on a strategy a the way forward at a summit yesterday, with the issue of coronabonds remaining a key sticking point.
The collapse in the price of crude is leading to rapid reduction in oil production at many American sites, with the industry braced for the biggest idling of wells in 35 years. In the world of physical delivery oil, a barrel is trading way below the benchmark spot prices, with substantial discounts offered for cargoes. There is no sign of relief in sight, with a barrel of West Texas Intermediate for May delivery trading at $22.50 this morning, while the meltdown in prices remains low on policy makers’ list of priorities.
The big question for investors at the moment is whether the rally in stocks this week will stick, or fail to gain further ground. Early signs are not great. While there was a rally in Asian stocks overnight, that has not carried through to Europe, where the Stoxx 600 Index was 2.2% lower at 5:50 a.m. Eastern Time as resources and bank stocks declined. S&P 500 futures pointed to a similar pullback at the open. The 10-year Treasury yield was at 0.765% and gold slipped.
The Fed’s success in meeting global dollar demand has seen the currency head for its biggest weekly loss since 2009. That doesn’t mean they are set to ease off on measures immediately, with a further $1.5 trillion of term and overnight repo operations due today. Meanwhile personal income and spending numbers from February are unlikely to do much to excite under the current circumstances when they are published at 8:30 a.m. University of Michigan Consumer Sentiment data is released at 10:00 a.m. The Baker Hughes rig count at 1:00 p.m. is likely to get more scrutiny than usual as investors look out for the damage the oil sell-off is doing on the ground.