Countries have begun to Resume Economic Activities
The focus of the market’s recent concern is that countries have begun to resume economic activities. Italy and Germany, which had earlier outbreaks in Europe, have begun to open up small-scale economic activities. After opening, they have not seen new cases rise again, indicating that the overall outbreak is still Continued controllability will keep the stock market relatively optimistic.
The Federal Reserve (Fed) this week expanded its corporate debt acquisition plan from the primary market to the secondary market, encouraging US stocks to surge. However, Fed Chairman Jerome Powell bluntly said that the move was only to fulfill the previous commitment to purchase corporate bonds, and the central bank had no intention of accepting the entire bond market.
MarketWatch and CNBC reported that in a testimony to Congress on the 16th, Ball said, “If the market function continues to improve, we are happy to slow down or even stop the asset acquisition. If the situation is reversed, we will increase the purchase.” “Fed does not want to own Trampling the bond market like an elephant and rolling all price signals… We just want to lend a helping hand when the economy gets worse.” He also suggested that Congress may need to increase spending to ensure that the US economy can fully recover.
Ball emphasized that the purpose of the Fed’s bond purchases is not to allow the Treasury to easily issue bonds. When all investors decide to exchange commodities for cash, which will stop the operation of the financial market, the Fed is required to acquire assets and help them unfreeze. In contrast, US Treasury bonds already have considerable market demand.
Ball said that investors’ willingness to take risks is enhanced because everyone believes that the Fed will keep its promises. He did not explain much about the unlimited quantitative easing monetary policy (QE) offered by the Fed.
On May 16, the newly announced US retail sales performed well, with a monthly growth rate as high as 17.7%, but Bauer believes that it should not be careless. He said that although the data shows that the economic situation has stabilized or even “moderately rebounded”, the overall economic output and employment conditions are still far below the water level before the outbreak, and the time and strength of economic recovery are still full of uncertainty. He believes that until the new coronary pneumonia (COVID-19, also known as Wuhan pneumonia) is under control, the economy cannot fully recover.
On Monday (15th), US stocks fell sharply and then fell. The Dow opened 335 points lower, fell at most 762 points in the early period, and then rose back to a high of 25891, closing at 25763, rising 157 points or 0.62%; the S&P 500 index and the Nasdaq They also recorded increases of 0.83% and 1.43% respectively.
US stocks rebounded on the same day, and the Fed announced that on the 16th, according to the new index (create a corporate bond portfolio that is based on a broad, diversified market index of US corporate bonds), buying in the secondary market will not For corporate bonds with maturity over 5 years, in order to establish a diversified index based on the corporate bond asset portfolio that covers all bond types in the secondary market in a balanced manner; together with the launch of the SME lending program, the Federal Reserve will inject up to 800 billion into the market USD liquidity. As for the purchase of corporate bonds and SME lending plans, they are all bailout measures of the Federal Reserve in response to the outbreak of the new coronary pneumonia epidemic.
On March 23 this year, the Federal Reserve announced the “Secondary Market Corporate Credit Facility” (SMCCF), with a scale of up to 750 billion US dollars. Individual corporate bonds as of 22nd, as long as they are still invested before the SMCCF announcement The rating, even if it falls to the trash level in the future, the Fed (without other options) will buy it. About a month ago, the Federal Reserve has purchased a total of about US$5.5 billion in corporate bond exchange-traded funds (ETFs) through the SMCCF, and is now expanding the purchase of corporate bonds to US$250 billion.
The Fed suddenly announced the full launch of the SMCCF. On the one hand, it was to implement the FOMC interest rate statement on June 10 and Chairman Powell’s public statements on many occasions to use all tools to fight the epidemic and save the market. More importantly, last Thursday (11th) US stocks opened higher and deeper. The Dow’s tail market once fell slightly more than 7%. If it is not close to the close, or the index is just a “flash”, it has triggered a 15-minute suspension of the market. Fuse mechanism.
Coincidentally, the size of the Fed’s balance sheet has increased from US$6.934 trillion on May 12 to 7.037 trillion, 7.097 trillion, and 7.165 trillion on a weekly basis, while the week ending June 9 has only increased From about 3 billion to 7.168 trillion US dollars. It seems that Wall Street’s small stock market crash on the 11th was caused by a significant slowdown in the pace of the Federal Reserve’s QE. The so-called worries about the outbreak of the second wave of outbreaks and so on are quite far-fetched “explanations.”
Don’t talk about Powell’s announcement to launch the SMCCF. In order to attend the congressional hearing today and tomorrow (16 and 17), have an account of the recent plunge in US stocks. In short, QE launched a new move, and the US stocks immediately reversed the decline. The Fed or Powell It can really be called “Danyou Shaxing”.
Stimulated by the performance of US stocks overnight, the Hang Seng Index gap opened higher by 542 points on Tuesday, contending between the 24302 and 24534 points throughout the day, closing at 24344, rising 567 points or 2.38%; although the 10 antenna (24524 points) has lost and lost, it has Significantly rose through 20 days and 50 antennas.