The US government has managed to surprise the markets and the central bank. Finance Minister Mnuchin told the Fed chief that the money remaining from the joint aid program should be withdrawn and redistributed by Congress. This is part of the CARES program (a $ 2.2 trillion fiscal package in March to support households, businesses and local governments) in which the Treasury Department has helped help companies with the Fed.
The role of the government is crucial, because the Fed alone cannot take the risk of making significant purchases of corporate debt. In fact, the government money was intended “only” to cover possible losses, but this helped to significantly inflate the capacity of support from the Fed. $ 455 billion, set aside mainly as a reserve, has been set aside for this purpose. The Fed’s program for companies is not widely used yet, yet its representatives are calling for an extension of its operation to maintain confidence in the corporate sector at the end of the year in the event of probable economic problems. The ministry’s request effectively shuts down this program, and the new administration will probably not talk about renewal until January.
Of course, the Fed has a lot of other programs in its arsenal and the total amount of liquidity in the market will hardly change. The initial shock therefore quickly faded to the markets. Of course, how much help can be lacking for companies in particular will determine the course of the epidemic. US states are gradually tightening restrictive measures, for example, California has recently added a night curfew. Overall, however, the expansion of the disease is beginning to indicate a gradual slowdown, which can be carefully described as a positive signal.
Shares in Europe started down, but then rose slightly into positive territory. Bond yields rose back to the level of yesterday’s conclusion. The Eurodollar currently tends to fall at the current exchange rate of 1.1860. Gold is slightly in the red.
The crown headed for decent profits in the morning. Although some of them were enough to return, they are trading stronger against the euro at 26.28. Over time, domestic news is likely to affect the currency. On the one hand, it is the prospect of phasing out restrictive measures, but also on new fiscal support in the form of tax cuts for individuals. The effectiveness of helping the economy is debatable, but “extra money” markets will usually please.
An overview of the exchange rates of the most important currencies today at 10:24 CET:
|HUF / EUR||358.9118||-0.1763||359.8714||358.6974|
|PLN / EUR||4.4646||-0.1253||4.4765||4.4610|
|NOK / EUR||10.6843||-0.1042||10.7155||10.6706|
|SEK / EUR||10.2235||-0.0303||10.2244||10.2008|
|CAD / USD||1.3057||-0.1339||1.3089||1.3054|