The European Central Bank has extended the period for reviewing monetary-policy strategy to mid-2021 because of the coronavirus pandemic. The ECB has also delayed the Forum on Central Banking to Nov. 10 to 12.
European Commission President Ursula von der Leyen has proposed a €100 billion plan to help employers keep employees on payrolls during the coronavirus pandemic. She says it is important to keep workers within their companies because that "enables companies to return to the market with renewed vigour".
US investment-grade issuers secured a record $260.7 billion from debt markets during March, Bank of America Global Research analysts say, despite the worsening coronavirus crisis. The analysts expect activity to continue this month with companies issuing a further $150 billion to $200 billion in new debt.
Bank of America analysts predict the severe quarantine measures currently in place across Europe will lead to a 7.6% contraction in the region's economy this year. They contend that measures taken so far by policymakers to stimulate the economy are insufficient and warn that "more fiscal help will be needed to limit permanent damage to the corporate sector and jobs."
The Federal Reserve's policy of directing liquidity initiatives at investment-grade and government debt risks creating a $9 trillion pool of "orphan" issuers, such as heavily leveraged companies, that do not qualify for relief. The policy could hurt otherwise creditworthy issuers, says Roberto Perli of Cornerstone Macro.
Two non-transparent exchange-traded funds began trading in the US on Thursday and may test the market's appetite for actively managed ETF products. ETF analyst Eric Balchunas comments "a lot of advisers just aren't looking at stock picking" amid the current volatility, although JPMorgan Chase analysts say mutual fund strategies could ultimately place as much as $7.2 trillion with such funds.
Ratings agencies are facing scrutiny as they issue downgrades in record numbers, with investors concerned they could spread alarm and repeat the disruption seen in the 2008 financial crisis.
Because of lessons learned during the financial crisis, European markets are more resilient and are still functioning, despite stress from the coronavirus pandemic, says Lee Bartholomew, head of fixed-income product design at Eurex. "We've learnt from the last financial crisis what has or hasn't worked, and banks are a lot more well capitalised," Bartholomew says.
A possible Russia-Saudi Arabia agreement to end the oil price war caused US oil prices to jump 35% and settle at a 25% increase, the largest single-day rise since 1983.
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