Boeing
BA 16.67%
Co. Chief Executive David Calhoun suggested he would decline taxpayer aid if lawmakers require the government to take an equity stake in the beleaguered aerospace giant.
“I don’t have a need for an equity stake,” Mr. Calhoun said in a Tuesday interview on Fox Business Network. “If they forced it, we’d just look at all the other options, and we have got plenty.”
Mr. Calhoun’s comments came as Congress was negotiating details of an aid package of more than $1.6 trillion aimed at blunting the economic fallout from the worsening novel coronavirus outbreak. The package could benefit businesses including Boeing and U.S. airlines and provide support for workers.
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The Treasury Department took equity stakes in banks as part of the Troubled Asset Relief Program during the banking crisis in 2008.
Instead of the government taking an equity stake in Boeing, Mr. Calhoun expressed support for taking out taxpayer-funded loans and repaying them with interest.
“I want them to support the credit markets, provide liquidity, allow us to borrow against our future, which we all believe in very strongly,” Mr. Calhoun said.
To ease its cash crash, Boeing has suspended its dividend and drawn down a credit line. It is seeking at least $60 billion in public and private aid for itself, its suppliers and the broader aerospace industry. On Monday, Boeing said it would halt production in the Seattle area for two weeks to curb the spread of the virus.
Mr. Calhoun acknowledged air travel is already virtually grinding to a halt, but expressed confidence the aviation industry would recover more quickly than more dire forecasts predict.
Major U.S. airlines are drafting plans for a potential voluntary shutdown of virtually all passenger flights across the U.S., according to industry and federal officials, The Wall Street Journal reported.
Government agencies also are considering ordering such a move and the nation’s air-traffic control system continues to be ravaged by the coronavirus contagion. No final decisions have been made by the carriers or the White House, these officials said
On Tuesday, the International Air Transport Association offered its latest forecast for global airline traffic, saying it would fall 38% in 2020 and cost carriers $252 billion in revenue. That is double its prior estimate of the impact of the coronavirus as it intensifies efforts to persuade governments to provide financial support for the industry.
The near-grounding of many airlines’ service as demand collapsed has forced them to park thousands of planes and left many carriers running out of cash, triggering job cuts as governments continue to expand travel restrictions.
“We need a full-speed rescue package now,” Alexandre de Juniac, IATA’s chief executive said on a call with reporters. Industrywide, airlines are looking for around $200 billion in support to cover their fixed costs.
Boeing CEO Dave Calhoun said it will take "a few years" for the company to get its balance sheet back to the levels it was at before the 737 Max crisis and the coronavirus pandemic.
The Chicago-based airplane manufacturer is seeking $60 billion in government aid for itself and its suppliers as the industry faces the fallout from the outbreak.
Lawmakers haven't yet reached a deal on what aid to the industry and the rest of the country will look like.
"The simpler, the shorter term in nature, the better," Calhoun said in an interview on CNBC's "Squawk Box."
Boeing has $15 billion in liquidity, and Calhoun expressed confidence that the company will make it through the crisis but said credit markets need to be open.
The company is burning a lot of that cash by continuing to pay its suppliers and employees without much revenue as its 737 Max is still grounded and airlines are now deferring orders since the virus has brought global travel to a near standstill.
"If there is no government support and the credit markets don't reopen, it will be fairly quick, but we can still make it to the other side," Calhoun said when asked what the company's cash burn rate is. "Now if this goes on for eight months, probably not."
The aviation industry are "at the point of the spear" of the virus and its impact, Calhoun said. Government aid would "keep our industry and people warm so when the recovery comes we're ready to go."
Boeing has shut down production at its Seattle-area facilities, which make up the majority of its aircraft manufacturing, amid cases of the virus in the area with several cases among Boeing workers.
The company is a major defense contractor and said that the U.S. Department of Defense is working on accelerating payments, Calhoun said.
The company last week announced that it would suspend its dividend and said that Calhoun would forgo his pay, measures other companies have taken to save cash, while they wait for government aid.
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As the private sector is getting involved in combatting the coronavirus outbreak, Ford Motor Company executive chairman Bill Ford said on Tuesday that the automobile company is working with General Electric and 3M to “gear up production” on essential medical equipment.
“We are going like hell, yes we are,” Ford told “Fox & Friends.”
Ford said that his company is collaborating with 3M in making “air-purifying respirators, face shields, and 3-D printing N95 respirator masks.”
“We got four different work streams going and we’re going as fast as we can,” Ford said.
Meanwhile, GM, Ventec Life Systems and StopTheSpread.org, coordinated private-sector response to COVID-19, are collaborating so that Ventec can increase its production of respiratory care products as hospitals across the U.S. face a potential ventilator shortage.
3M has doubled its production of N95 respirator masks since the coronavirus outbreak to a rate of nearly 100 million a month, Street Insider reported.
Ford said that the medical equipment will be ready “soon.”
Ford went on to say, “And on the ventilator with GE, we’re helping them prototype, we’re using our engineers and manufacturing people and then as soon as we get that right, we’re going to go like crazy.”
The Dow Jones Industrial Average
DJIA,
+7.29%
rose 1,366 points, a rise of 7.5%, to reach 19,957, the S&P 500 index
SPX,
+6.39%
advanced 141 points, or 6.3%, to trade at 2,379 and the Nasdaq Composite index
COMP,
+5.78%
gained 402 points, or 5.8%, at 7,262.
On Monday, the Dow tumbled 582.05 points, or 3%, to settle at 18,591.93, its lowest reading since Nov. 9, 2016, the day of President Donald Trump’s election. The S&P 500 slipped 67.52 points, or 2.9%, to close at 2,237.40 points. The Nasdaq Composite Index shed 18.84 points, or 0.3%, to end at 6,860.67.
What’s driving the market?
U.S. lawmakers inched toward an agreement on a roughly $2 trillion coronavirus rescue package, according to a report by the Washington Post, helping to reignite the buying appetite on Wall Street for the moment, after lawmakers on Monday twice failed to reach an agreement, sending stocks into a fresh tailspin.
Senate Minority Leader Chuck Schumer said from the Senate floor that he had “very good” discussions with U.S. Treasury Secretary Steven Mnuchin, who is leading the talks on the Republican side, and that the list of outstanding issues has narrowed “significantly.”
“Political fighting in the US has prevented a stimulus scheme from being revealed earlier, but dealers are optimistic nonetheless,” wrote David Madden, market analyst at CMC Markets UK, in a daily note.
Losses on Monday came even after the Federal Reserve unfurled its most potent batch of stimulus measures to date, saying it would buy an unlimited amount of Treasurys and mortgage-backed securities, among other measures, to stem the harm from the virus and unlock seized up areas of financial markets.
Markets across the globe have been reeling from planned, temporary business shutdowns, including that of Spain, the U.K., and Italy, to mitigate the spread of COVID-19, the infectious disease that is derived from a novel strain of coronavirus, and which has infected 390,000 people globally since it was first identified in December.
The intentional lockdowns are expected to drive much of the world, including the U.S., into a recession.
However, President Donald Trump on Tuesday has floated the idea of restarting the economy soon to limit the damage to small and medium-size businesses, a notion that has run against the advice of his coterie of health advisers. That idea may partly be heartening some staunch stock-market bulls, despite the implications of more rapid spread of the illness and a higher death toll.
Meanwhile, reports that the outbreak was peaking in Europe also offered some glimmers of hope for market bulls. Indeed, both new cases and deaths have dropped for two days in Italy, and the head of Germany’s public health institute said the infections rate in Europe’s largest economy was leveling off.
“Sensibly, investors are now actively seeking these ‘new world’ sectors and companies in order to grow and protect their wealth.,” wrote Nigel Green, chief executive of deVere Group, an independent financial advisory firm, in a Tuesday note.
Looking ahead, in economic reports, the IHS Markit releases its U.S. Purchasing Managers’ Index for March at 9:45 a.m. Eastern Time. Expectations are for a 49 reading, down from February’s 49.6 figure. After that, the new residential home sales for February are due at 10 a.m. Economists forecast a seasonally adjusted annual rate of 740,000 homes sold. That estimate would be down 3.1% from January’s 764,000 rate.
Phillips 66
PSX,
+4.93%Shares ofcould be in focus on Tuesday after the oil company said that it secured a $1 billion term loan, cut its capital expenditures for 2020 and temporarily suspended share buybacks.
European stocks were in rally mode, as the Stoxx Europe 600
SXXP,
+5.28%
gained 4.9%.
In Asia overnight, stocks closed higher, with the China CSI 300
000300,
+2.68%
up 2.7%, Hong Kong’s Hang Seng index
HSI,
+4.45%
adding 4.5% and Japan’s Nikkei 225
NIK,
+7.13%
ending the session 7.1% higher.
The U.S. dollar traded lower, compared to a basket of its major peers. The ICE U.S. dollar index
DXY,
-0.79%
was down 0.8%.
The coronavirus that causes COVID-19 has led many companies to lay off or furlough workers, temporarily close stores and offices and shut down production, but has also inspired some to become creative in their handling of the crisis.
CVS Health
CVS,
-2.94%,
for example, said Monday it is embarking on one of the most ambitious hiring drives in its history with plans to hire 50,000 full-time, part-time and temporary workers—and it has decided to tap directly into its customers’ workforces by taking on furloughed workers from the Marriott
MAR,
-5.96%
and Hilton
HLT,
+2.80%
hotel chains.
The drugstore chain said it would use a “technology-enabled hiring process that includes virtual job fairs, virtual interviews and virtual job tryouts.”
Taking on furloughed workers from its own customers will likely speed up the hiring process as those workers will have had background checks and met other requirements that employers seek.
“I think it’s a great idea,” said Andy Challenger, senior vice president of outplacement firm Challenger, Gray & Christmas. “Hopefully, when demand for hotels returns, they can be transitioned back. It gets into the question of what is the best way to get through this from a labor market standpoint.”
During the 2008 financial crisis, many American workers lost their jobs and it took a full eight years to get them back into the economy, he said. ”If this can become a more seamless way to keep people in wages, it could be a positive turn for the economy.”
Then there’s Washington Prime Group Inc.
WPG,
-6.03%,
a mall real-estate investment Trust, that said Monday it is temporarily closing indoor malls, but has a novel idea for local governments and agencies. The company is offering to use all of its open air malls to serve as distribution centers for emergency medical supplies, for COVID-19 testing and for food depository stations.
“Our company is basically comprised of over one hundred distinctly local venues,” Chief Executive Lou Conforti wrote in a letter directed to local and state government agencies, excerpts of which were released on Monday.
“Each and every one serves a specific demographic constituency and shame on us if ‘serve’ is exclusively defined as the sale of a good or service. We characterize our assets as town centers and especially in a time of need this sure as heck transcends footwear, cosmetics or a lamp.”
The company is offering local public school districts the space to distribute free breakfast and lunch to children 18 and under. It is also working with its restaurant tenants to start offering meals to health care workers and other first responders.
Weight loss and nutrition company Jenny Craig, which is owned by private-equity firm H.I.G. Capital, is addressing the crisis by adopting phone coaching for clients and curbside meal delivery.
The company’s more than 500 owned and franchised locations are closed to prevent the spread of the virus, but most are still operating by phone, the company said. The company is also offering home delivery options, including for customers who use Walgreens
WBA,
-6.05%
as pickup centers for meals.
Others are ramping up production of needed equipment. 3M Co.
MMM,
-5.62%,
for example, has doubled global production of N95 respirators to a rate of nearly 100 million a month, or more than 1.1 billion a year, to arm health care workers, Chief Executive Mike Roman said on Sunday. In the U.S., the company is producing 35 million respirators a month, with more than 90% being designated for health care workers, and the rest to other critical sectors, such as energy, food and pharmaceutical companies, Roman said in a statement.
“As a global company, we also manufacture respirators in Europe, Asia and Latin America, and our products are being similarly deployed to support the COVID-19 response in those respective regions,” he said.
3M is expecting to nearly double its capacity again within the next 12 months and is working with the U.S. and other governments to explore alternative manufacturing scenarios and cooperation with other companies to accelerate the process.
“We’ve also maximized production of a wide range of other solutions being used in the response, including hand sanitizers and disinfectants,” said Roman.
Honeywell Inc.
HON,
-7.68%
has said it too is increasing production of face masks. GE
GE,
-6.28%
has ramped up production of ventilators and Coty
COTY,
+14.95%
has switched some production to make hand sanitizers.
The car companies, General Motors Co.
GM,
-2.97%,
Ford Motor Co.
F,
-7.39%
and Tesla Inc.
TSLA,
+1.58%,
have said they are considering shifting production away from cars to make needed ventilators, although it is unclear how quickly that might happen.
Companies are also tapping credit lines, cutting costs, suspending dividend and share buyback programs and ordering employees to work from home.
LONDON (Reuters) - Global equities rebounded almost 2% on Tuesday, off near four-year lows, and the dollar slipped as investors pinned hopes on unprecedented stimulus steps by the U.S Federal Reserve and other policymakers to ease strains in financial markets.
While the measures such as the Fed’s offer of unlimited bond-buying won’t immediately mitigate the economic devastation inflicted by the coronavirus outbreak, they will launch more dollars into world markets, allowing companies, funds and banks to access cash to pay creditors, supplier and end-investors.
The prospect had not cheered Wall Street for very long on Monday, with losses of 2-3% on major indexes, but the mood improved on Tuesday, possibly as many other central banks and governments looked set to join the fray. Wall Street futures pointed to stocks opening 4% higher, while a pan-European equity index also rallied a similar amount.
“Today there is a strong recovery connected to the move that the Fed has introduced this massive weapon,” said Francois Savary, CIO of wealth manager Prime Partners, noting the Fed had needed to resolve funding markets seize-ups as a priority.
“The key issue at the end of the day is that we need to deal with a credit markets that is completely closed. First they needed to stop this increase in bond yields... second, they needed to make sure that there is a return of liquidity in the credit then it will be equities - in that sequence.”
The Fed will not only buy unlimited amounts of assets but also expand its mandate to corporate and municipal bonds and backstop a series of other measures that analysts estimate will deliver $4 trillion-plus in loans to non-financial firms.
There were also signs of progress in Congress on a $2 trillion U.S. stimulus deal, which Treasury Secretary Steven Mnuchin hoped was “very close”.
Other countries are unveiling their own measures - South Korea’s ravaged market climbed 8.6% after the government doubled a planned economic rescue package to 100 trillion won ($80 billion).
In China, mainland stocks posted their biggest gain in three weeks with a rise of almost 3% while Japan’s Nikkei soared 7%, its biggest daily rise since Feb 2016.
Not everyone was optimistic the buoyant mood would last noting, for instance, that global coronavirus infections now top 350,000 with scores of countries in lockdown. China too posted a rise in new infections brought in from abroad.
“Markets are continuing to bounce up on the latest policy announcements and then sliding back down as the economic reality of the situation re-emerges,” Deutsche Bank strategist Jim Reid said.
Still, the plan calmed nerves in bond markets, where yields on two-year Treasuries hit their lowest since 2013. Ten-year yields were at 0.8339%, from last week’s peak of 1.28%. Yields inched higher on Tuesday as equities rallied.
ALL ABOUT THE ECONOMY
Just how much the virus is ravaging the global economy is evident in a series of growth forecast downgrades and advance readings of purchasing managers indexes (PMI) across the world’s biggest economies.
German activity plunged to the lowest since the 2009 crisis, driven by a record services contraction, while French activity hit all-time lows. Japan posted its biggest-ever services decline.
“Economies around the world are going offline and that is devastating for economic activity, it’s creating the most robust dislocation in financial markets in living memory,” said George Boubouras, head of research at K2 Asset Management in Melbourne.
For now however, the prospect of massive Fed funding pushed the greenback 0.5% lower against rivals, off three-year peaks. It fell similarly to the yen and slumped 1% versus the euro.
Commodity and emerging market currencies also benefited, with the Australian dollar up almost 2% to $0.59315 and well off 17-year lows.
FILE PHOTO: Pedestrians wearing face masks walk near an overpass with an electronic board showing stock information, following an outbreak of the coronavirus disease (COVID-19), at Lujiazui financial district in Shanghai, China March 17, 2020. REUTERS/Aly Song
There was some relief on the market volatility front too. A gauge of expected euro-dollar swings eased below 12%, from above 14% on Monday, and a measure of U.S. equity volatility slipped to one-week lows around 57 points.
(Graphic: Volatility is back on Wall Street png, here)
Reporting by Sujata Rao; Additional reporting by Karin Strohecker in London, Wayne Cole in Syndey and Scott Murdoch in Hong Kong; Editing by Alex Richardson
U.S. stock futures and global equities rose Tuesday, following sharp swings at the start of the week, as investors parsed central bank and government responses to the coronavirus pandemic and its economic fallout.
Futures linked to the S&P 500 index gained about 5%, suggesting U.S. shares could rise when the market opens in New York. European equity indexes climbed, with the pan-continental Stoxx Europe 600 advancing 5. Most Asian markets also closed higher, led by a 7.1% jump in Japan’s Nikkei 225 gauge and an 8.6% rise for South Korea’s key equity benchmark.
A string of emergency measures by the Federal Reserve to support credit markets and ensure funding for American businesses and homeowners has helped alleviate some of the most pressing concerns among investors. At the same time, markets remain sensitive to reports of fresh outbreaks of the virus, and the damage caused to the economy by measures to stem the contagion.
Trading day
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Still, speculation about the breadth and depth of an impending global recession continue to weigh on investors.
“This is classic bear-market moves,” said David Coombs, head of multiasset investments at Rathbones Investment Management. “It doesn’t feel like there’s massive relief and confidence out there.”
U.S. lawmakers have so far failed to reach an agreement on a more than $1.6 trillion economic rescue package. Concerns about growth prospects have erased more than a third of the value in the S&P 500 index in recent weeks, and left volatility in American stocks at elevated levels.
On Tuesday, March figures for the manufacturing and services sector in Germany and the eurozone pointed to a contraction. Figures for the U.S., due later in the day, are also expected to show a fall.
“It’s an unprecedented medical emergency which requires an unprecedented response from policy makers,” said Florian Hense, an economist at Berenberg. “As we are trying to contain the medical emergency, we are trying to pull down economic activity. We are consciously, voluntarily pulling down economic activity.”
Gold rose about 4%, a move that some investors saw as a return to normalcy in the functioning of financial markets, as the price of the precious metal usually rises in times of uncertainty. Last week, it fell 2.1% as investors, looking to hold cash, divested gold amid a broader selloff in assets across the board.
The WSJ Dollar Index, which tracks the currency against a basket of others, eased 0.9%. On Monday, the gauge hit its highest closing level since 2002. Currencies including the euro, British pound, Swiss franc, Australian dollar and Korean won strengthened against the dollar.
The demand for U.S. government bonds, which are seen as a haven when markets are in turmoil, showed signs of easing. The yield on the 10-year U.S. Treasury, which moves inversely to its price, rose to 0.821%, from 0.763% Monday, according to Tradeweb.
Moves by the Fed and other central banks to keep interest rates low and ensure money was available for corporations is essential to prevent a complete economic meltdown, said David Gaud, Asia chief investment officer and head of discretionary portfolio management at Pictet Wealth Management.
“It’s moving in the right direction but it’s not sufficient,” to support world economies without decisive government action to address the economic fallout as well, he said. He said the longer the pandemic lasts, the greater its economic impact would be, in which case current fiscal and monetary policy responses might prove insufficient.
Brent crude, the global oil benchmark for oil, rose 5.1% to $30.78 a barrel. Crude prices have plunged by more than half on worries about reduced demand and a price war between major oil-producing nations.
The global death toll from the novel coronavirus surpassed 16,000, with more than 367,000 confirmed cases. Cases in the U.S. alone grew 10-fold to cross 41,000 from a week earlier, as more state governors ordered residents to stay home. Meanwhile, the U.K. joined other European countries in mandating a lockdown under a raft of restrictions from the government.
U.S. stock-index futures and global equities rose after the Federal Reserve stepped up its assistance to the American economy, saying it would back lending to businesses and buy essentially unlimited amounts of government debt.
S&P 500 futures gained 4.9%, suggesting U.S. shares could rise later in the day.
European indexes climbed, with the pan-continental Stoxx Europe 600 rising 4.3% and the German DAX gaining 5.9%.
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Japan’s Nikkei 225 closed 7.1% higher, while South Korea’s Kospi rose more than 8%. A second day of sharp gains for
SoftBank Group Corp.
on a $41 billion asset-sale plan helped buoy the Nikkei. Benchmarks in Hong Kong, Australia, Shanghai, India and New Zealand also advanced.
Sherwood Zhang, a portfolio manager at Matthews Asia, welcomed the Fed action. “Hopefully, the Fed’s latest move should be able to help tighten credit spreads globally, easing pressure on the cost of borrowing for corporations,” he said, adding that U.S. political gridlock mattered less internationally.
Mr. Zhang said he had used the market selloff to increase his holdings of high-quality stocks, including some consumer companies with long-term growth potential whose shares have been battered recently.
David Gaud, Asia chief investment officer at Pictet Wealth Management, said moves by the Fed and other central banks to keep interest rates low and ensure money was available for corporations were essential to prevent a complete economic meltdown.
“It’s moving in the right direction but it’s not sufficient,” to support economies without decisive government action to address the economic fallout, he said. He said the longer the pandemic lasts, the greater its economic impact would be, in which case current fiscal and monetary policy responses might prove insufficient.
The Federal Reserve said it would back lending to businesses and buy essentially unlimited amounts of government debt.
Photo:
Liu Jie/Zuma Press
The global death toll from the novel coronavirus surpassed 16,000, with more than 367,000 confirmed cases. Cases in the U.S. alone grew 10-fold to cross 41,000 from a week earlier, as more state governors ordered residents to stay home. Meanwhile, the U.K. joined other European countries in lockdown under a raft of restrictions from the government.
The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, eased 0.6% Tuesday to 96.42. On Monday, the index hit its highest closing level since 2002. The gauge was created in 2012 but back-calculated to 2001. Regional currencies including the Australian dollar, Korean won and Chinese yuan strengthened against the dollar.
The 10-year U.S. Treasury note, which is seen as a haven, declined in price. The yield on the note, which moves in the opposite direction of its price, rose to 0.815% from 0.763% Monday, according to Tradeweb.
Brent crude, the global oil benchmark, rose 4.1% to $30.49 a barrel. Crude prices have plunged on worries about reduced demand and a price war between major oil producers.
SYDNEY/HONG KONG (Reuters) - Asian equities markets rallied on Tuesday as investors bet the U.S Federal Reserve’s promise of unlimited dollar funding would ease painful strains in financial markets even if it could not stop the economic hit of the coronavirus epidemic.
FILE PHOTO: A pedestrian wearing a face mask walks near an overpass with an electronic board showing stock information, following an outbreak of the coronavirus disease (COVID-19), at Lujiazui financial district in Shanghai, China March 17, 2020. REUTERS/Aly Song
While Wall Street seemed unimpressed, investors in Asia were encouraged enough to lift E-Mini futures for the S&P 500 ESc1 by 4.2% and Japan's Nikkei .N225 shot up 7.13%, its biggest daily rise since February 2016.
The prospects for Tuesday’s European session also looked brighter as EUROSTOXXX 50 futures STXEc1 and FTSE futures FFIc1 both rose 4.9%.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS jumped 4.9%, to more than halve Monday’s drop.
South Korea's ravaged market climbed 8.6% .KS11 after the government doubled a planned economic rescue package to 100 trillion won (68.81 billion pounds).
K2 Asset Management head of research George Boubouras said despite gains on Tuesday in Asian equities, financial market sentiment remained fragile even as the co-ordinated stimulus measures were implemented around the world.
“The biggest trigger for positive sentiment in these markets will be a flattening of the trajectory for the virus,’ he told Reuters by phone from Melbourne.
“Economies around the world are going offline and that is devastating for economic activty, it’s creating the most robust dislocation in financial markets in living memory.”
Central banks and governments, he said, needed to implement ‘bold and innovative’ monetary and fiscal policies to stave off the prospect of a damaging credit crunch hitting global financial systems.
“It is not a credit crunch yet and it liquidity measures are critical to stopping that,” he said.
Macquarie Wealth Management divisional director Martin Lakos said the speed of the equity market decline made the current sell-off arguably worse then the 2008 global financial crisis.
“The falls that we have seen have been breathtaking, and it is the speed of those declines that have caught people by surprise,” he said.
“If the number of cases start to stabilise, and that gives investors confidence then we could start to see them revert to fundamentals. Markets are not trading on fundamentals right now.”
In its latest mold-breaking step, the Fed offered to buy unlimited amounts of assets to steady markets and expanded its mandate to corporate and municipal bonds.
Analysts estimatged the package could make $4 trillion or more in loans to non-financial firms.
“What they did, more than just starting up some new programs, was to drive home they are willing to do whatever it takes,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets. “We would not call into question their resolve.”
The plan helped calm nerves in bond markets where yields on two-year Treasuries hit their lowest since 2013. Ten-year yields were at 0.8339%, from last week’s peak of 1.28% US10YT=RR.
Still, analysts cautioned it would do little to offset the near-term economic damage done by mass lockdowns and layoffs.
Speculation is mounting data due on Thursday will show U.S. jobless claims rose an eye-watering 1 million last week, with forecasts ranging as high as 4 million.
Economists at JPMorgan expect claims to surge by a record 1.5 million and forecast a 14% annualised fall in U.S. gross domestic product for the second quarter. They see European GDP down almost 24% and Latin America 12%.
A range of flash surveys on European and U.S. manufacturing for March are due later on Tuesday and are expected to show deep declines into recessionary territory.
Surveys from Japan showed its services sector shrank at the fastest pace on record in March and factory activity at the quickest in about a decade.
DOLLAR OFF HIGHS
For now, the prospect of massive U.S. dollar funding from the Fed saw the currency ease back to 110.32 yen JPY= from Monday's one-month top of 111.56.
The euro bounced 0.5% to $1.0797 EUR=, up from a three-year trough of $1.0635. The dollar index slipped 0.4% to 101.720 =USD and off a three-year peak of 102.99.
Commodity and emerging market currencies that suffered most during the recent asset rout also benefited from the Fed's steadying hand. The Australian dollar climbed 1.8% to $0.5937 AUD=D3 and away from a 17-year low of $0.5510.
Gold surged in the wake of the Fed’s pledge of yet more cheap money, and was last up 1% at $1,569.70 per ounce XAU= having rallied from a low of $1,484.65 on Monday.
There were also signs that gold metal itself was in short supply with the premium on exchange for physical blowing out.
Oil prices also bounced after recent savage losses, with U.S. crude CLc1 up $1.08 cents at $24.44 barrel. Brent crude LCOc1 firmed $1.09 to $28.12.
