Economic News From Last Week

June 3 – Reuters (Pedro Fonseca): 

“Brazil registered another record number of novel coronavirus deaths over the last 24 hours, the health ministry said…, as the pandemic in Latin America’s largest country shows no signs of slowing down. The nation registered 28,936 additional cases of the novel coronavirus, the ministry said, and 1,262 deaths. There are now 555,383 total confirmed coronavirus cases in Brazil and 31,199 coronavirus deaths.”

June 3 – Associated Press:

 “The coronavirus pandemic pushed Australia’s economy into recession for the first time in 29 years in the first quarter of the year, and the situation is expected to get worse. Treasurer Josh Frydenberg said… the current June quarter will be the second in a row in which the Australian economy has contracted.”

June 2 – CNBC (Jeff Cox): 

“Getting the U.S. economy back to strong growth could require negative interest rates, according to a St. Louis Federal Reserve economist. 

As many economists dismiss the likelihood of the current record-breaking slump being followed by an equally aggressive recovery, central bank economist Yi Wen said in a paper on the St. Louis Fed’s website that achieving that kind of a rebound is necessary and possible. The key, he said, is using aggressive stimulus even beyond what authorities deployed during the financial crisis, and that could include taking interest rates below zero.”

June 3 – Wall Street Journal (Matt Wirz): 

“The Federal Reserve thawed credit markets in March by promising a whatever-it-takes program to buy corporate bonds. Ten weeks later, the Fed has yet to buy a single bond. 

Just the announcement of the backstop ended panic selling, boosted prices and fueled a record surge of new corporate-bond sales. Companies are now reluctant to sign up for Fed purchases because such a move could be seen as a sign of weakness during a market rebound, some bond fund managers and bank executives said. ‘I really don’t think the market needs it anymore,’ said Columbia Threadneedle Investments portfolio manager Thomas Murphy. ‘They are the victim of their own success.’”

June 1 – Wall Street Journal (Paul Hannon and Paul Kiernan): 

“ GDP isn’t expected to catch up to the previously forecast level until the fourth quarter of 2029… The roughly $3.3 trillion in stimulus programs enacted by Congress since March will only ‘partially mitigate the deterioration in economic conditions,’ the CBO said  The U.S. economy could take the better part of a decade to fully recover from the coronavirus pandemic and related shutdowns, a U.S. budget agency said… The Congressional Budget Office, a nonpartisan legislative agency, said the sharp contraction triggered by the coronavirus caused it to mark down its 2020-30 forecast for U.S. economic output by a cumulative $7.9 trillion, or 3% of gross domestic product, relative to its January projections. .”

June 4 – Bloomberg (Ana Monteiro): 

“U.S. trade in goods and services plunged in April to the lowest level in almost a decade… Exports declined from the prior month by 20.5%, the biggest drop in comparable data back to 1992, to $151.3 billion. Imports decreased 13.7%, also the most since 1992, to $200.7 billion. Combined, the value of U.S. exports and imports decreased to $352 billion, the lowest since May 2010… The overall gap in goods and services trade expanded to $49.4 billion…”

May 30 – Associated Press (David Pitt): 

“ U.S. shoppers lately have seen the costs of meat, eggs and even potatoes soar as the coronavirus has disrupted processing plants and distribution networks. Overall, the cost of food bought to eat at home skyrocketed by the most in 46 years, 

and analysts caution that meat prices in particular could remain high as slaughterhouses struggle to maintain production levels… The… 2.6% jump in April food prices was the largest monthly increase in 46 years. Prices for meats, poultry, fish and eggs increased the most, rising 4.3%. Although the 2.9% jump in cereals and bakery products wasn’t as steep, it was still the largest increase the agency has recorded. Dairy and related products, and fruits and vegetables increased by 1.5% in April.”

June 1 – Reuters (Joshua Franklin): 

“U.S. public companies sold more than $60 billion in shares in May, the biggest monthly haul ever, as they capitalized on a stock market rally fueled by hopes that the COVID-19 pandemic is subsiding… ‘We’re talking to a lot of companies around the fact that the market is here, you don’t know what lies in the economy to come,’ said Ryan Parrish, head of Americas equity capital markets syndicate at Bank of America. ‘If you even remotely have a need you should get it done now.’”

June 4 – Bloomberg (Molly Smith and Jeremy Hill):

 “Companies strong enough to gain access to the bond markets have borrowed $1 trillion this year at the fastest pace on record. Then there are those that can’t afford to carry the debt they have, leading to the most large bankruptcy filings in the first five months of the year since 2009, during the Great Recession.”

June 1 – Financial Times (Joe Rennison): 

“The percentage of commercial property loans left unpaid by borrowers in the US more than trebled last month, in a sign of a deepening crisis in the $1.3tn market for bonds backed by the mortgages.

The delinquency rate on loans underpinning commercial mortgage-backed securities rose from 2.3% in April to 7.4% in May, according to the data service Trepp. Borrowers are considered delinquent when they fail to make a payment within 30 days. A further 8.6% of mortgages were in that 30-day grace period after missing a payment.”

May 30 – Reuters (James Pomfret and Stella Qiu): 

“China’s state media and the government of Hong Kong lashed out… at U.S. President Donald Trump’s vow to end Hong Kong’s special status if Beijing imposes new national security laws on the city, which is bracing for fresh protests… ‘The baton of sanctions that the United States is brandishing will not scare Hong Kong and will not bring China down,’ China’s Communist Party mouthpiece, the People’s Daily, wrote… It used the pen name ‘Zhong Sheng’, meaning ‘Voice of China’, often used to give the paper’s view on foreign policy issues.”

June 1 – Reuters:

 “China has told state-owned firms to halt purchases of soybeans and pork from the United States, two people familiar with the matter said, after Washington said it would eliminate special treatment for Hong Kong to punish Beijing. Large volume state purchases of U.S. corn and cotton have also been put on hold, one of the sources said. China could expand the order to include additional U.S. farm goods if Washington took further action, the people said.”

June 2 – Reuters (Gabriel Crossley): 

“China’s services sector returned to growth last month for the first time since January as the economy recovers from strict coronavirus-induced containment measures, although employment and overseas demand remained weak, 

a private survey showed. The Caixin/Markit services Purchasing Managers’ Index (PMI) rose to 55.0 in May from 44.4 in April, hitting the highest level since late 2010.”

May 30 – Reuters (Stella Qiu and Gabriel Crossley): 

“China’s factory activity grew at a slower pace in May but momentum in the services and construction sectors quickened, pointing to an uneven recovery in the world’s second-largest economy… 

The official manufacturing Purchasing Manager’s Index (PMI) eased to 50.6 in May from 50.8 in April… Export orders logged the fifth consecutive month of contraction, with a sub-index standing at 35.3 in May, well below the 50-point mark, as the coronavirus pandemic continued to take a toll on global demand.”

June 4 – Reuters (Alexander Weber and Carolynn Look):

 “The European Central Bank intensified its response to the ‘unprecedented contraction’ facing the euro area with a bigger-than-anticipated increase to its emergency bond-buying program… President Christine Lagarde and colleagues decided to expand the amount of purchases by 600 billion euros ($675bn) to 1.35 trillion euros, and extended their duration until at least the end of June 2021. The vast majority of economists surveyed by Bloomberg last week expected a boost of 500 billion euros”

May 31 – Reuters (Jonathan Cable and Leika Kihara): 

“Export powerhouses Japan and South Korea seeing the sharpest falls in activity in over a decade, surveys showed.

The new coronavirus pandemic… has wreaked havoc with supply chains and quashed demand as government-imposed lockdowns forced businesses to close and citizens to stay home.”

June 3 – Reuters (Jamie McGeever): 

“Industrial production in Brazil fell at its fastest pace on record in April due to the COVID-19 pandemic…, although the decline was not as severe as economists had expected. Output fell 18.8% in April from March and 27.2% from the same month a year ago, both by far the steepest declines since the IBGE series began in 2002.”

June 1 – New York Times (Mary Williams Walsh and Matt Phillips): 

“From Angola to Jamaica to Ecuador to Zambia, the world’s poor countries have had their finances shredded by the global pandemic. The president of Tanzania has called on ‘our rich brothers’ to cancel his country’s debt. Belarus veered toward a default when a promised $600 million loan from Russia fell through. Russia couldn’t spare the money because the ruble had taken a nose-dive… Lebanon, troubled even before the pandemic, has embarked on its first debt restructuring. And Argentina has defaulted again — for the ninth time in its history.”

June 4 – Reuters (Leika Kihara, Kaori Kaneko and Tetsushi Kajimoto): 

“Japan’s household spending fell at the fastest pace on record in April 

as the coronavirus shut down travel and dining-out in the world’s third-largest economy, while fears of higher job losses chilled consumer confidence… Household spending tumbled 11.1% in April from a year earlier…”