RBNZ Launches QE

General Trend:

  • Lockdown measures by governments continue; AU and NZ announce lockdown measures; State governments in India announce lockdown of various cities across the country; NYC’s lockdown measures took effect on Sunday night at 8 PM
  • Aussie banks drop over 8.5% amid decline in 10-year yields, Consumer Discretionary index drops over 9% as traders assess lockdown measures in Australia
  • Japanese equity markets rise following Friday’s holiday; Sectors moving higher include Insurance, Iron & Steel, Marine Transportation, Banks and Electric Appliances
  • Softbank Group rises on plan to repurchase stock and reduce debt
  • Sectors declining in Shanghai include Consumer Discretionary, IT, Property and Financials
  • Kospi remains volatile, the index declined by over 5.8% after gaining more than 7% on Friday; Korean Won (KRW) declines by over 1.5% versus US dollar
  • NZ and AU 10-year bond yields decline as central banks undertake QE, equities decline
  • RBA buys maximum of A$4.0B in today’s QE operation (vs A$5.0B prior)
  • Japan PM Abe now believes the Tokyo Olympics could need to be postponed under certain circumstances
  • Australia and Canada announce they will not send their athletes to Tokyo Olympics, IOC still dragging their feet on a decision, while Japan says a decision needs to be made within the next 4 weeks
  • G20 may not issue statement following later today emergency conference call (financial press)

Headlines/Economic Data

Australia/New Zealand

  • ASX 200 opened -4.6%
  • (NZ) RESERVE BANK OF NEW ZEALAND (RBNZ) ANNOUNCES NZ$30B ASSET PURCHASE PROGRAM TARGETED AT GOVT BONDS, across all range of maturities; Planning to buy NZ$500M in bonds this week and NZ$750M bonds each week
  • (AU) Australia PM Morrison: total stimulus now stands at A$189M and that will not be the last; Australian states are mulling draconian measures to enforce social distancing
  • (AU) Reserve Bank of Australia (RBA) buys total of A$4.0B in bonds v A$5.0B prior
  • (AU) Australia PM Morrison: Will close Australia boarders for up to 6-months or more, restriction will not be lifted until it is safe to do so; only Australia citizens or permanent residents will be allowed in – radio address
  • (NZ) Reserve Bank of New Zealand (RBNZ) lends NZ$650M via TAF facility v NZ$200M prior; Offered NZ$2.0B
  • (AU) Australia Tourism and Hotel Chief has sent letter to Govt requesting A$900M relief package from Australia Govt, noted hotels are currently operating at below 10% occupancy rates – SMH
  • (AU) Reserve Bank of Australia (RBA) adds A$3.7B to banking system through repos v A$4.25B prior (smallest operation in 8 days)
  • (AU) Australia Parliament to meet today for special sitting to pass stimulus measures including additional A$66B package which includes A$100K for small businesses each and doubling unemployment allowance
  • (AU) Australia Council of Financial Regulators (CFR) quarterly statement: Financial regulators and the Australian Government are working closely together to help ensure that Australia’s financial markets continue to operate effectively and that credit is available to households and businesses amid coronavirus
  • (NZ) New Zealand Fin Min Robertson: Expanding wage subsidies, NZ$150K wage cap has been removed

Japan

  • Nikkei 225 opened +0.1%
  • (JP) Bank of Japan (BOJ) offers to buy ¥300B in 3-5 year JGBs and ¥500B in 5-10 year JGBs (unscheduled)
  • (JP) Japan PM Abe: Unthinkable to cancel Olympics but they must be safe for athletes and spectators; must consider postponing Olympics if safety is not guaranteed
  • 9984.JP Sets aside ¥4.5T for buyback and reducing debt (¥2.0T in buybacks); will sell assets over the next 4 quarters
  • (JP) International Olympic Committee (IOC) in talks to postpone the games – FT
  • 9984.JP WeWork board said to be fighting Softbank’s cancelled plans to purchase shares (Softbank was planning to purchase $3.0B in shares from investors and employees)

Korea

  • Kospi opened -5.9%
  • (KR) South Korea may announce KRW27T in market measures tomorrow, March 24th – Yonhap
  • (KR) South Korea announced tough “social distancing” measures for civil servants, employees of public organizations and soldiers nationwide, effective for at least 2-weeks
  • (KR) South Korea Vice Fin Min Kim: Will strengthen monitoring of money markets; Global economy may contract larger than expected
  • 005380.KR Temporarily halts production in India
  • (KR) South Korea reports 64 new coronavirus cases in the last 24-hours; Total 8,961; total deaths 111
  • (KR) South Korea sells 20-year bonds; avg yield 1.795% v 1.43% prior

China/Hong Kong

  • Hang Seng opened -5.0%; Shanghai Composite opened -2.5%
  • (CN) China PBOC Vice Gov Chen: policy measures to address coronavirus have achieved significant results; expect China CPI rises to gradually ease, there is no basis for long; China’s financial system remains stable we have ample policy tools, seeing no bid rise in defaults
  • (CN) China National Health Commission Coronavirus Update for March 22th: 39 additional cases (all imported) v 46 prior; Additional deaths: 9 v 6 prior; Hubei: 0 additional cases v 0 prior; additional deaths: 9 v 5 prior
  • (CN) China PBOC sets Yuan reference rate: 7.0940 v 7.1052 prior
  • (CN) China PBoC Open Market Operation (OMO): Skips reverse repo operations for the 24th consecutive session, Net CNY0B v CNY0B prior
  • 494.HK Receives HK$7.2B go private offer from founding family and Singapore’s GLP
  • (HK) Hong Kong Chief Exec Lam announces increased coronavirus measures: Schools to remain suspended; closes all public sport facilities, libraries, and museums; we are facing a cricital moment in getting virus under control
  • (CN) Shanghai, China downgrades emergency alert level as coronavirus spread has eased

Other

  • (IN) India announces all districts in New Delhi to be locked down, while the financial hub around Mumbai must keep an non-essential businesses closed through March 31st, cancelled all but bare minimum of transport services, 75 districts in 22 states are also on lockdown – press

North America

  • (US) US Senate Majority Leader McConnell (R-KY): Senate to re-vote on Republican bill at 09:45AM EST unless deal is made
  • Follow Up: (US) Senate vote on coronavirus bill will be later than the prior announced 09:45AM
  • (US) Fed’s Kashkari (dove, FOMC voter): US will at least have a mild recession; Fed will ensure banks have cash to meet demand; Fed is being very aggressive and there is more Fed can do
  • (US) US Senate coronavirus bill does not get enough votes to clear first procedural hurdle; The vote on the bill was 47 to 47 [60 votes were needed to advance the measure]
  • (US) US Senate Majority Leader McConnell: Senate will vote again at time of his choosing [comments after Senate failed to advance the coronavirus bill]
  • (US) Senate Min Leader Schumer (D-NY): bill presented by Republican Senate leadership had many many problems and is a large corporate bailout
  • (US) White House economic adviser Kudlow: Coronavirus stimulus package could be ~10% of GDP (implies worth more than $2.0T) – The Hill
  • (US) Fed’s Bullard (dove, non-voter): US unemployment rate may reach 30% in Q2 due to coronavirus shutdowns and GDP could fall upwards of 50%; everything is on the table for Fed to provide support
  • (US) Treasury Sec Mnuchin: Believes rescue package will get done with Congress; to help half of US workforce – Fox interview
  • GILD Said to have temporarily halted access to remdesivir due to overwhelming demand; will make exceptions for pregnant women and childred under the age of 18 with ‘severe manifestations’ – press

Europe

  • (UK) Financial Conduct Authority (FCA) requests delay to upcoming announcement of prelim financial accounts
  • AIR.FR Plans to reopen Spanish and French plants on March 23rd at lower than normal production levels – FT
  • (DE) Germany expected to authorize issuance of €350B in new debt (~10% of its GDP) to fight coronavirus; Fin Min Scholz also expected to present a €600B bailout fund for companies impacted by the virus – FT
  • (DE) Germany Chancellor Merkel tightens restrictions amid coronavirus: No more than 2 people may be together in public unless they are families or living together, restaurants closed expect for delivery and takeout; initially for a period of at least 2-weeks
  • (ES) Spain PM Sanchez to seek parliamentary approval to extend state of emergency to April 11th (expected to pass) as coronavirus death toll rises
  • (EU) ECB De Guindos: EU should consider using Eurobonds to deal with coronavirus, virus will place Europe into a recession

Levels as of 1:15ET

  • Hang Seng -4.7%; Shanghai Composite -2.2%; Kospi -4.4%; Nikkei225 +1.7%; ASX 200 -5.6%
  • Equity Futures: S&P500 -4.7%; Nasdaq100 -4.1%, Dax -3.2%; FTSE100 -3.2%
  • EUR 1.0738-1.0637; JPY 111.26-109.97; AUD 0.5826-0.5701; NZD 0.5686-0.5594
  • Commodity Futures: Gold +0.7% at $1,495/oz; Crude Oil +0.3% at $22.69/brl; Copper -4.3% at $2.06/lb
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