Market movers today

COVID-19 developments continues to drive markets . Today at 10.30 CET we host a conference call on the latest developments. We will offer our views on the developments and market implications.

In the US the House of Representatives is expected to pass the USD2,000bn fiscal stimulus tonight. It was approved unanimously in the Senate on Wednesday.

The US releases data for personal spending and core PCE inflation in February. However, since the numbers are from before the COVID-19 virus really hit, we doubt it will get much interest.

In Norway the government is set to announce another stimulus package (see page 2). Sweden releases retail sales for February.

We published our Nordic Outlook with updated economic forecasts for the Nordic countries.

 

Selected market news

US stocks have been rising for three days in a row for the first time since February. While both central banks and governments have done a lot to tackle the economic side of the coronavirus crisis, we think one should be careful stating that this is the bottom. US futures are down around 1.6% this morning. That said, we think both central banks and governments will do more if necessary. It is interesting that the US spending package includes more money to the Exchange Stabilization Fund, which US Treasury uses to inject money into the Fed's various credit programmes. (US Treasury provides 10% of credit protection to the Fed). This means the Fed's various credit programmes can be expanded significantly if needed. In our view, the credit market and the liquidity situation are key to whether the Fed will do more or not.

US initial jobless claims rose by 3.3 million last week, which was a new record high. There is no doubt that the US is in the middle of a deep recession, which is also why we think it is positive that the politicians have agreed on a huge spending package and the Fed has gone all in. That is what is needed to avoid this developing into a prolonged recession.

New data for Fed's balance sheet shows an increase of USD586bn to USD5,254bn, a new record high, due to the Fed's new credit and liquidity programmes and increasing QE buying. The balance sheet is expected to rise much further in the near future for the same reasons.

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