· CORONAVIRUS CRISIS:
· US cases: At least 1,570,583 (20,289) and deaths: 93,533 (+1,552)
· Russia cases: At least 299,941 (+9,263) and deaths: 2,837 (+11)
· Brazil cases: At least 271,885 (+16,517) and deaths: 17,983 (+1,130)
· Thailand cases: At least 3,033 (+2) and deaths: 56
· Dollar weak as euro rises on Franco-German proposal for recovery fund
The U.S. dollar edged lower against the euro on Tuesday as the common currency added to Monday’s gains following news of a Franco-German proposal for a fund that would offer grants to European Union regions and sectors hit hardest by the coronavirus pandemic.
Encouraging results from the trial of a vaccine for COVID-19 reduced demand for safe havens and the greenback rose to a near one-month high against the Japanese yen..
Germany and France, whose agreements usually pave the way for broader EU deals, proposed that the European Commission borrow 500 billion euros ($550 billion) on behalf of the whole EU. The Commission is expected to outline their proposal before a European summit scheduled for May 27.
The euro was 0.25% higher against the greenback at $1.0942, on pace for a two-day gain of about 1 percent.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 99.554 following its decline from levels above 100 earlier in the week.
· Mnuchin defends U.S. fiscal response to pandemic, seeks payroll loan extension
U.S. Treasury Secretary Steven Mnuchin on Tuesday defended the Trump administration’s fiscal response to the coronavirus pandemic and told senators he was willing to consider extending and modifying a payroll loan program for small businesses.
In a sometimes testy hearing before the Senate Banking Committee, Mnuchin and Federal Reserve Chair Jerome Powell said the nearly $3 trillion in federal rescue programs rolled out over the past two months were working to support an economy devastated by the novel coronavirus.
The Treasury and Fed chiefs faced tough questions over whether the administration’s plans to quickly reopen the economy in the wake of lockdowns imposed in March and April would leave low-wage workers without adequate protections from the virus.
· Mnuchin says seeing large second quarter unemployment, negative economic data
U.S. Treasury Secretary Steven Mnuchin said on Tuesday that he is continuing to see large unemployment numbers and other negative economic indicators during the second quarter, but the situation is expected to improve as the U.S. economy starts to reopen.
“Working closely with governors, we are beginning to open the economy in a way that minimizes risks to workers and customers,” Mnuchin said in written testimony to the Senate Banking Committee. “We expect economic conditions to improve in the third and fourth quarters.”
One focus of interest among lawmakers during the hearing was about the strain on state and local governments and potential for additional support. “We are continuing to look at ways to accommodate further borrowing,” Powell said.
Powell also said the central bank is ready to use all the weapons in its arsenal to help the U.S. economy endure the coronavirus pandemic, as attention shifts to whether Republicans and Democrats will agree to more fiscal aid.
“We are committed to using our full range of tools to support the economy in this challenging time even as we recognize that these actions are only a part of a broader public-sector response,” Powell said.
Mr. Powell warned that the economy could face long-term damage if the policy response was not forceful enough, and reiterated that the economy might need more help to make it through the coronavirus period without lasting scars.
“There is clear evidence that when you have a situation where people are unemployed for long periods of time, that can permanently weigh on their careers and their ability to go back to work,” he said.
Mr. Powell suggested that the central bank might expand its program to buy municipal debt and agreed that state and local governments could slow the economic recovery if they laid off workers amid budget crunches.
· Coronavirus hammers U.S. homebuilding; permits tumble
U.S. homebuilding dropped by the most on record in April and permits for future construction tumbled, underlining fears that the coronavirus crisis would lead to the deepest economic contraction in the second quarter since the Great Depression.
Housing starts tumbled 30.2% to a seasonally adjusted annual rate of 891,000 units last month, the lowest level since early 2015. The percentage decline was the biggest since the government started tracking the series in 1959. Starts dropped 18.6% in March. Economists polled by Reuters had forecast housing starts would fall to a pace of 927,000 units in April.
Homebuilding fell in all four regions last month. Housing starts plunged 29.7% on a year-on-year basis in April.
· Fed's Rosengren says U.S. unemployment rate could remain at double-digit levels by end of year
U.S. businesses will face weak demand as long as consumers and workers are worried about public health, and the unemployment rate is likely to still be in the double digits at the end of the year, Boston Federal Reserve Bank President Eric Rosengren said Tuesday.
The unemployment rate could peak at close to 20% as more Americans lose jobs in shutdowns to limit the spread of the coronavirus, and job losses could linger, Rosengren said in remarks prepared for a webinar hosted by the New England Council.
Moreover, he said that policymakers would consider lowering the minimum loan amount for the upcoming Main Street Lending Facility to reach more businesses.
· Trump administration signs up new company to make COVID-19 drugs in U.S.
U.S. President Donald Trump’s administration awarded a contract worth up to $812 million for a new U.S. company to manufacture drugs and drug ingredients to fight COVID-19 on American soil, aiming to end dependence on other countries.
The administration has been looking to build up the ability to produce drugs and their raw materials in the United States after the global pandemic exposed the industry’s dependence on China and India for its supply chain.
· Trump signs order directing agencies to cut federal regulations
U.S. President Donald Trump signed an executive order on Tuesday directing federal agencies to cut regulations, a move he said would help the economy recover from the impact of the coronavirus outbreak.
Trump, who signed the order at a Cabinet meeting, said it instructed agencies to eliminate “unnecessary regulations that impede economic recovery.”
President Donald Trump said on Tuesday the United States should consider terminating trade deals under which it imports cattle as he looks to help U.S. ranchers hit hard by the coronavirus outbreak.
· Trump says considering travel ban on Brazil over coronavirus
U.S. President Donald Trump said on Tuesday he is considering imposing a ban on travel from Brazil, which has the world’s third highest number of people infected by the novel coronavirus.
“We are considering it,” Trump told reporters at the White House.
“I don’t want people coming over here and infecting our people. I don’t want people over there sick either. We’re helping Brazil with ventilators. ... Brazil is having some trouble, no question about it,” Trump added.
· China, U.S. coronavirus tensions spill over in U.N. Syria meeting
Growing tensions between China and the United States around the coronavirus pandemic publicly spilled over on Tuesday during a U.N. Security Council meeting on humanitarian aid operations in Syria as envoys traded barbs over global leadership.
U.S. Ambassador to the U.N. Kelly Craft called on China “to validate its claims of global leadership in combating COVID-19” by supporting “a resolution to allow the U.N. to combat this pandemic by delivering life-saving aid cross-border” into Syria.
· Pandemic sinks Japan business mood to decade low, outlook even bleaker: Reuters Tankan
The slump in Japanese business confidence deepened in May, hitting decade lows as firms braced for a protracted period of coronavirus-driven economic weakness, the Reuters Tankan survey showed on Wednesday.
The downbeat findings came after data this week showed the world’s third-largest economy slipped into its first recession in 4-1/2 years last quarter, as the broadening impact of the highly contagious virus depressed business and consumer activity at home and abroad.
· U.S. crude strengthens as certain stimulus measures to continue
U.S. crude ended slightly higher on Tuesday, as U.S. Treasury Secretary Steven Mnuchin said he supported extending certain measures intended to bolster the economy, while Brent ended lower on concerns that output cuts might not be sufficient.
Oil has rallied for several days following numerous output cuts from major producers to curb supplies, and as demand picks up with governments worldwide easing restrictions on movement put in place to stop the spread of the coronavirus pandemic.
The front-month contract for U.S. West Texas Intermediate crude, which expires on Tuesday, settled up 68 cents a barrel, or 2.1%, at $32.50 a barrel. The July contract, trading at vastly higher volumes, settled up 31 cents at $31.96 a barrel.
Benchmark Brent crude was settled at $34.65 a barrel, down 16 cents or 0.5%.
Reference: CNBC, Reuters, Yahoo, New York Times, Worldometers
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