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NOVOX International Financial Information

The European Central Bank made the worst plan and prepared an emergency plan for the Bundesbank ’s withdrawal from its debt purchase plan
Four sources told Reuters that the European Central Bank is drafting an emergency plan to implement its trillion-dollar bond purchase plan without the involvement of the Bundesbank in case the German Supreme Court forces this major participant of the plan to withdraw. Anonymous sources said that in this worst-case scenario, the European Central Bank will take unprecedented legal action against its largest shareholder, the German central bank, to re-engage in the debt purchase program. 

The European Commission on Wednesday will announce a plan to help the EU economy recover from the landslide caused by the new crown epidemic. The plan includes a series of grants, loans and guarantees with a total size of more than 1 trillion euros.

European Central Bank: Eurozone economy is still facing serious threats, ultra-low interest rates will continue for a longer time
① The European Central Bank said that although policymakers have taken unprecedented measures to deal with the new crown epidemic, the Eurozone economy still faces serious threats. The European Central Bank stated in its financial stability report that the severe economic recession has brought new risks to the financial system and exacerbated the original risks. The ability of banks to support economic recovery under pressure is affected;
② The report shows that as countries slowly resume normal economic activities, debts will increase substantially, banks' profitability will weaken, and market vulnerabilities will continue to cast a shadow on the euro zone. The probability of corporate defaults and real estate prices falling has also increased;
③ Just one day ago, the European Banking Authority warned that because of loan losses and increased risk assets on the balance sheet, banks may face capital losses of 315 billion euros ($ 345 billion);
④ The report emphasizes that despite the support of trillions of euros in monetary policy and the government ’s large amount of financial assistance, politicians and central bank officials will face challenges in the next few years, which will largely depend on the development of the epidemic and whether it must be collected again. Tighten the blockade to limit the spread of the virus;
⑤ The European Central Bank Vice President Luis de Guindos said in a statement: "The epidemic has caused one of the most severe economic contractions in recent history. It is necessary to address the impact of this epidemic on the profitability prospects of banks and the public finances in the medium term. So that the financial system can continue to support economic recovery "

The European Central Bank is expected to start a fierce debate on the abolition of capital contribution regulations
① The European Central Bank seems destined to have a heated debate again, because a central bank policymaker proposed to remove an important provision that many people believe is a restriction on the power of the European Central Bank;
② Francois Villeroy de Galhau, Governor of the Bank of France, said that the capital contribution ratio is an “unnecessary restriction” on the ECB ’s emergency asset purchase plan. The regulation forced the European Central Bank to purchase government bonds of 19 countries according to the economic scale of member countries;
③ Luis de Guindos, deputy governor of the European Central Bank, in an interview, played down the importance of the position of the governor of the French central bank, stressing the easing of tensions in the sovereign bond market and saying that "we have flexibility in the short term"; The regulation "is something we have not discussed in the management committee";
④ The European Central Bank's management committee will meet in about a week, and the market believes that the European Central Bank is more likely to increase the size of its 750 billion euros ($ 817 billion) emergency purchase plan at this meeting;
⑤ Any measures to relax the restrictions on the proportion of capital contribution may trigger the opposition of some officials, who regard this provision as a key measure to prevent the European Central Bank from directly providing financing to member governments, and European laws also prohibit the European Central Bank from directly providing financing to the government. ;
⑥ At the same time, however, the relaxation of the regulations can also give the ECB greater flexibility to allocate its purchase operations and use funds where it is most needed, without having to increase the total size of the plan

US consumer confidence rose slightly in May, and new home sales increased unexpectedly in April
US consumer confidence rose slightly in May, suggesting that as the US economy restarts, the worst period of recession triggered by the new crown epidemic may have passed, but in the context of the record unemployment rate, the economy may take some time to get out of the predicament. The World Large Enterprise Research Association said that this month the consumer confidence index rose slightly to 86.6, higher than the revised 85.7 in April. The U.S. Department of Commerce announced that new home sales increased 0.6% in April, with a seasonally adjusted annual rate of 623,000 units. Another survey showed that Texas manufacturing activity fell again in May, but at a slower rate than the record decline in April. Similarly, service industry activity in the central Atlantic Coast region continued to decrease, but escaped the record decline in April.

Institution: US house prices rose 4.4% year-on-year in March
House prices in the United States rose by 4.4% year-on-year in March, up from 4.2% last month, and the annual rate of housing prices in 10 and 20 major cities is higher than the previous value. Craig Lazala, S & P Dow Jones's investment strategy go-to-ball manager, said, "The March data witnessed the first impact of the new coronavirus pandemic on the S & P / CS index, and only data from 19 cities were obtained this month. Nonetheless The house prices remain stable. This report covers real estate transactions at the end of March, when house prices were not yet affected by the restrictive measures. Since most of the US economy was closed in April, the April data is expected to show more obvious impact of the epidemic."

Rystad: US oil production in June will hit a low of 10.7 million barrels per day
① Rystad Energy released a report on Tuesday that US oil production will bottom out at 10.7 million barrels / day in June, which will be the lowest in two years;
② Analysts said that the recovery will be slow and monthly output is unlikely to exceed 11.7 million barrels per day by 2022;
③ The output of crude oil will be about 11.1 million barrels / day at the end of this year;
④ Rystad's benchmark price scenario assumes that the WTI price will be US $ 30 in 2020 and will rise to US $ 39 in 2021.

Russia is said to be determined to reduce its production cuts in July according to the OPEC + agreement
① According to people familiar with the matter, Russia hopes to relax its oil production cuts starting in July, in line with the terms of the OPEC + agreement reached in April; due to the sudden drop in demand caused by the pandemic, OPEC and its allies reached a historic production cut agreement in April. As part of the production reduction agreement, the rate of production reduction will gradually decline from July;
② But after the signing of the agreement, Saudi Arabia tried to support the market through additional production cuts, and the Gulf allies followed suit. As OPEC + prepares to meet in two weeks, its members are weighing whether to expand or reduce production cuts;
③ Three Russian officials and two insiders said that Russia's position is to adhere to the original agreement. Kremlin spokesman Dmitry Peskov told reporters on Tuesday that the agreement was "undoubtedly successful" and countries will observe the situation and then make a decision at the June 10 meeting

St. Louis Fed Chairman Brad: The unemployment rate is expected to return below 10% by the end of the year
① St. Louis Fed Chairman Brad predicted that the US economy will recover from the highest unemployment rate since the 1930s and will rebound quickly, reducing the unemployment rate to less than 10% by December; Brad accepted Fox Business Network TV on Tuesday The interview stated that the commercial closure due to the new crown epidemic could not continue for too long without risking worse economic consequences;
② Brad said that the current growth may be the worst ever, and many people on Wall Street predict that economic growth will contract by 40% in the second quarter. After the worst quarter, the third quarter is very likely to be the best quarter ever in terms of growth prospects; although the unemployment rate last month was 14.7%, I think that by the end of this year, the unemployment rate will reach double digits Below; Brad ’s view is more optimistic than most people on Wall Street, and economists expect the unemployment rate to reach 10.3% in the fourth quarter;
③ Brad believes that the enterprise can be closed for 90 days or 120 days, but then it needs to resume operations, otherwise it may be permanently closed, which will cause lasting damage to the economy; the risk is that this will evolve into a financial crisis and make the situation change. Worse, and then turned into an economic depression; Brad has no voting rights for monetary policy this year, he and other Fed officials have said that during the economic recovery, the central bank will keep interest rates close to zero indefinitely

The chairman of the Minneapolis Federal Reserve warned that if the epidemic crisis continues, there will be a wave of bankruptcy
Speaking at an online event hosted by the Federal Reserve Bank of Minneapolis on Tuesday, Minneapolis Fed Chairman Kascali said: "The response to the economic policy of the two-month shutdown is very straightforward. But if we actually set foot on It ’s an 18-month journey, so our way of thinking about economic policy response will change completely; I would think that Congress may not be able to survive all these restaurants and try to help them survive for two years. More likely Everyone will eventually see the wave of bankruptcy of small businesses across the country, which in itself will bring about economic destruction, but this is why economic policymakers pay special attention to the question of how long this crisis will last. "

Bank of England Chief Economist: The Bank of England is not close to implementing negative interest rates
① A key decision-making official of the Bank of England is playing down the possibility that the central bank will immediately lower the interest rate below zero, saying “Be clear, evaluation and implementation are different things”. The Bank of England ’s chief economist Andy Haldane said a week ago that central bank officials were assessing negative interest rates, adding on Tuesday that policymakers do not rule out any options “in principle” and we are currently in the evaluation stage;
② Holdan ’s comments prompted traders to postpone negative interest rate bets until August next year, and last week was expected to be December 2020; Holdan said that the Bank of England will study the impact of negative interest rates on the financial sector, because negative interest rates will squeeze The interest rate spread between loans and deposits, and its impact on economic confidence; the rate of recovery of economic output may not be as fast as when it fell, and may not rise to the level before the epidemic until the end of next year;
③ Holdan said that it is understandable that households and businesses will remain cautious in spending for a long time; the government should focus on instilling confidence to boost consumer spending, as the UK now seems to be experiencing a frugal paradox; according to the Bank of England ’s According to the latest forecast, employment opportunities may not return to the level before the outbreak of the new coronavirus until 2022 or 2023; this is a V-shaped recovery, but a fairly uneven V-shaped, accompanied by downside risks

Net purchases of securities ETFs against the market, with a net inflow of nearly 5 billion yuan in the second quarter
Since the second quarter of this year, as the stock market turbulence has intensified, there has been a net outflow of funds in the stock ETF market. However, the brokerage ETF, which is the wind vane of institutional investors, has attracted nearly 5 billion gold against the market. Wind data shows that as of May 25, the total size of the eight stock ETF funds in the market is 36.77 billion yuan, an increase of 3.672 billion yuan or 11.09% from the end of the first quarter; compared with the data at the end of last year, it has increased significantly 13.666 billion yuan, an increase of 59.13% in scale. Calculated by the average transaction price in the range, as of May 25, the above eight stock ETFs had a net inflow of 4.772 billion yuan since the second quarter of this year, and showed a pattern of net buying across the board (China Fund News)

Multi-sectoral efforts to stabilize foreign trade and then welcome the policy "combination punch"
① The government work report is clear and promotes the basic stability of foreign trade;
② Focus on supporting enterprises to increase orders and stabilize job security, increase credit supply, expand coverage of export credit insurance, reduce import and export compliance costs, and support export products for domestic sales;
③ Representatives and industry experts interviewed by reporters pointed out that these policy deployments involve multiple departments and multiple fields, which means that the policy combination will work harder, and under the premise of protecting the main body of the foreign trade market, promote the development of new foreign trade formats and models to help Enterprises develop international and domestic diversified markets and provide stronger support and support for stabilizing foreign trade (Economic Reference News)

GMT(time)

Currency

News and Data

00:00

USD

 

CB Consumer Confidence (May)

 

07:00

CAD

 

BoC Gov Poloz Speaks 

 

09:00

NZD

 

RBNZ Gov Orr Speaks 

 

17:30

EUR

 

ECB President Lagarde Speaks

 


Summary of Institutional Perspectives

HSBC: The European Central Bank may increase the size of the anti-epidemic emergency debt purchase program by 500 billion euros


NOVOX International Financial Information


① As inflation prospects substantially weaken and the EU ’s fiscal deficit increases, HSBC expects the European Central Bank to announce the expansion of the emergency anti-epidemic debt purchase plan (PEPP) scale at 500 billion euros at a policy meeting on June 4 and may announce a bond Refinancing when it is due, it is expected that the European Central Bank is unlikely to cut interest rates further;
② HSBC senior economist Fabio Balboni said that the minutes of the European Central Bank meeting in March showed that people are still worried about the negative impact of further negative interest rate cuts. Some members of the European Central Bank Council believe that buying assets is a more effective option for stabilizing risk-free interest rates.

Lloyds Bank: Bank of England negative interest rates and trade talks may hurt sterling


NOVOX International Financial Information


Lloyds Bank strategist Gajan Mahadevan believes that if the market ’s attention continues to shift from the epidemic to other sources of risk, news of the Bank of England ’s negative interest rates and the continued challenges of trade negotiations between the United Kingdom and the European Union may adversely affect the pound against the dollar.

Danske Bank: Bank of England expected to keep interest rates unchanged, Brexit negotiations put sterling under pressure


NOVOX International Financial Information


① The Bank of England is expected to maintain its policy rate unchanged. Bank of England Deputy Governor Broadbent did not completely rule out the possibility of negative interest rates, while Bank of England Governor Bailey hinted that it may increase QE projects;

② It is expected that the conflict of Brexit negotiations will continue to have a negative impact on the pound, especially the UK and Europe need to discuss the possible transition period extension, financial services and fishery issues before July 1. It is expected that the euro will exchange against the pound in 1-6 months It will be at 0.90 level.


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NOVOX International Financial Information