· Coronavirus updates
More than 75,000 people globally have been infected with the new coronavirus, known as Covid-19, with the number of fatalities exceeding 2,000.
FT data visualisation journalist Steve Bernard has crunched the latest figures and compiled the map above. It shows there are now 75,147 cases, with 2,007 deaths. Roughly 96 per cent of the deaths have taken place in China's Hubei province, where scientists believe the disease first began infecting humans last December.
· Dollar index at near 3-year high as yen sinks on stronger risk appetite
The U.S. dollar climbed on Wednesday to near a three-year high against a basket of other currencies and the safe-haven yen sank to a nine-month low as a decline in the number of new coronavirus cases in China and expectations for more policy stimulus boosted investors’ appetite for risk.
Strong U.S. data that could support the Federal Reserve’s desire to keep interest rates unchanged after lowering borrowing costs three times in 2019, supported the greenback.
China posted the lowest daily rise in new coronavirus cases since Jan. 29.
Many view Chinese data on the virus with skepticism, but sentiment was lifted by a Bloomberg report that Beijing was considering cash injections or mergers to bail out airlines hit by the virus.
Against the Japanese yen, which tends to benefit during geopolitical or financial stress as Japan is the worlds biggest creditor nation, the dollar rose 0.96% to 110.91, its highest since May.
On Wednesday, the dollar was supported by data that showed U.S. homebuilding fell less than expected in January while permits surged to a near 13-year high, pointing to sustained housing market strength.
Other data showed producer prices increasing by the most in more than one year last month.
The U.S. Dollar Currency Index, which measures the greenback’s strength against six other major currencies, rose 0.24% at 99.688, its highest since May 12, 2017.
The euro bounced briefly above $1.08 but sank below the mark to trade down slightly against the greenback.
The single currency had earlier fallen to a three-year low after a survey showed weakening confidence in Germany.
Sterling slipped back under $1.30, shrugging off data showing an unexpected surge in UK inflation to a six-month high in January as focus returned to Britain’s trade talks with the European Union and government plans to boost spending.
· US 10-YEAR TREASURY YIELDS FALL TO 1.558%, FROM 1.564%, AFTER FED MEETING MINUTES
· Fed policymakers cautiously optimistic on U.S. economy despite new risks, minutes show
Federal Reserve policymakers were cautiously optimistic about their ability to hold interest rates steady this year, minutes of the central bank’s last policy meeting showed, even as they acknowledged new risks caused by the coronavirus outbreak.
The readout on Wednesday of the policy discussion, at which policymakers unanimously voted to keep interest rates unchanged in a target range of between 1.50% and 1.75%, also showed Fed officials were skeptical about any big rethink of the central bank’s inflation target.
“Participants generally saw the distribution of risks to the outlook for economic activity as somewhat more favorable than at the previous meeting,” the Fed said in the minutes of the Jan. 28-29 meeting. It went on to say the current stance of monetary policy was likely to remain appropriate “for a time.”
Coming into this year the Fed had made clear that, after three interest rate cuts in 2019, it plans to hold interest rates steady, barring a significant change in the U.S. economic outlook.
Policymakers have pointed to U.S. consumer spending levels, dissipating U.S-China trade tensions and loose financial conditions as supporting their view, but how long such an upbeat assessment can last has already been tested by escalating concern about the global economic impact of the coronavirus outbreak that started in China.
- Senior Federal Reserve staff proposed ending longer-term loans to banks after April as part of a broader blueprint laying out how the central bank could scale back the support provided to money markets, the minutes from the January policy meeting showed.
The proposal, which received a warm reception from policymakers, explained how the Fed could gradually reduce interventions in the market for repurchase agreements, or repo, and slow its balance sheet expansion.
· Fed's Kashkari sees Fed on hold for three-six months, flags coronavirus risk
The Federal Reserve is likely to keep interest rates where they are until mid-2020 but may then need to cut them, Minneapolis Fed Bank President Neel Kashkari said on Wednesday, pointing to the coronavirus in China as one potential risk to the U.S. economy.
“If I were to guess, I’d guess we’re probably going to sit here for the next three months, next six months, maybe longer,” Kashkari told a symposium in Mankato, Minnesota.
“But if I were to guess what the next move would be, my best guess is the next would be down rather than up, because we are pretty close to neutral today, and there are any number of shocks around the global economy that could hit the U.S. economy and call for lower rates.”
· Bank of America warns negative U.S. rates could hurt operations
Bank of America Corp (BAC.N) cited the possibility of negative interest rates in the United States as a business risk for the first time in a filing on Wednesday.
The unconventional policy measure has been a talking point for President Donald Trump, who has critiqued the Federal Reserve for raising interest rates earlier in his presidency.
· Coronavirus poses risk to modest pickup in global growth, G-20 draft communique says
Financial leaders of the world’s 20 largest economies (G-20) expect a modest pickup of global growth this year and next, but see the coronavirus epidemic as a downside risk, a draft communique prepared for the meeting on Feb. 22-23 said.
G-20 finance ministers and central bank governors meet on Saturday and Sunday in Riyadh to discuss the global economy, as China grapples with a virus that has killed more than 2,000 people and forced drastic curbs on travel and commerce.
“After signs of stabilization at the end of 2019, global economic growth is expected to pick up modestly in 2020 and 2021. The recovery is supported by the continuation of accommodating financial conditions and some signs of easing trade tensions,” the draft, seen by Reuters, said.
“However, global economic growth remains slow and downside risks to the outlook persist, including those arising from the impact of the novel coronavirus outbreak, geopolitical tensions and policy uncertainty,” said the draft, which may still be changed before the final version is adopted on Sunday.
· Oil up more than 2% on slowing coronavirus cases, U.S. move on Venezuela
Oil prices gained more than 2% on Wednesday as worries eased about demand declining due to the spread of coronavirus cases in China, while supplies tightened as the United States moved to cut off more Venezuelan crude from the market.
Brent crude LCOc1 settled at $59.12 a barrel, rising $1.37, or 2.4%. U.S. oil CLc1 settled at $53.29, gaining $1.24, or 2.4%.
Official data showed new coronavirus cases in China fell for a second day, although the World Health Organization said there was not enough data to know if the epidemic was being contained.
Wall Street reached new highs on optimism China would stimulate its economy and counteract the impact of the outbreak.
China is expected to cut its benchmark lending rate on Thursday to limit damage from business shutdowns and travel curbs. The world’s second-largest economy has imposed city lockdowns and travel restrictions to contain the virus that has now killed more than 2,000 people.
S&P Global Ratings said it expected the virus would deliver a “short-term blow” to economic growth in China in the first quarter, echoing findings by the International Energy Agency.
The oil market price structure is also showing signs that prompt demand for oil is picking up, as the front-month Brent futures market is moving deeper into backwardation LCOc1-LCoc7, when near-term prices are higher than later-dated prices.
Reference: CNBC, Reuters, Financial Times
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