Stocks Climb to Five-week Highs; Bonds Gain

US stocks rose to almost five-week highs as traders speculated that lawmakers will eventually provide more stimulus and corporate deal activity increased. Treasury bond yields dropped and the dollar weakened. The S&P 500 rose by 0.80% to 3,446.83 while Dow Jones was up 122.05 points (0.43%) to 28,425.51.

About 60 Million US Households Expect Income Losses This Month

Nearly 60 million Americans expect someone in their household will lose a job or take a pay cut in the next four weeks, according to survey results released by the US Census Bureau. Minority households in particular are continuing to struggle economically from the coronavirus pandemic, according to the survey conducted.

Fed’s Rosengren Says More QE May Lack Punch, Fiscal Power Needed

Federal Reserve officials kept up pressure for Washington to renew fiscal support for the virus-ravaged economy even as hopes of a deal between Democrats and Republicans continued to look dim. “Fiscal policy is the right tool for this time,” Boston Fed President Eric Rosengren said. “I think it’s tragic that it has not been employed already.”

Ending Lockdown as Virus Rages Won’t Aid Long-run GDP, IMF Says

Lifting lockdowns is unlikely to lead to a decisive and sustained economic boost as long as Covid-19 infections remain elevated, because people will probably keep avoiding social interactions out of fear of contracting the virus, the International Monetary Fund said. New IMF research shows that while government lockdowns contributed significantly to the global recession, the slowdown was also driven in large part by people continuing to exercise voluntary social distancing, the fund said.

Bank of Canada Keeps Door Open to Possibility of Negative Rates

Bank of Canada Governor Tiff Macklem said negative interest rates remain an option, even if policy makers aren’t currently considering such a move. “We are not actively discussing negative interest rates at this point but it’s in our toolkit and never say never,” Macklem said. The Bank of Canada’s current policy rate is at a record-low 0.25%.

Japanese Merchants’ Mood Returns to Least Gloomy Since 2018

The mood among Japanese merchants improved in September to the least pessimistic in almost two-and-a-half years, adding to signs that a recovery is taking root in the economy following a virus-induced slump. A gauge of current sentiment among store managers, barbers, taxi drivers and others who deal directly with consumers climbed to 49.3, the highest since April 2018, the Cabinet Office’s Economy Watchers survey showed.

Philippines’ Rodrigo Duterte says he’ll ensure budget is passed on time

Philippine President Rodrigo Duterte said he will intervene if there’s a delay in Congress’ approval of next year’s 4.5trn-peso (US$93bn) proposed budget that’s seen to help in economic recovery. Duterte, told the House of Representatives to resolve the impasse in its leadership and ensure that the budget bill is passed on time. “If and when I see that there will be a delay, and it will result in the derailment of government service, I will solve the problem for you,” he said.

Oil Surges With Hurricane Delta Paralyzing US Gulf Output

Oil climbed to the highest in more than a month as Hurricane Delta forces operators to shut in nearly 92% of crude output in the Gulf of Mexico. Brent crude for December settlement gain US$1.35 to US$43.34 per barrel.

Source: Affin Hwang Research - 9 Oct 2020