Stocks Post Biggest Weekly Increase Since July

US stocks rallied, with the S&P 500 posting its biggest weekly increase since July, as traders bet lawmakers are moving closer to providing more fiscal stimulus. The S&P 500 rose by 0.88% to 3,477.13 while Dow Jones was up 161.39 points (0.57%) to 28,586.90.

Kashkari Says Economy Needs More Fiscal Support to Aid Recovery

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. Without additional fiscal relief, the recovery will likely be a lot weaker, Dallas Fed President Robert Kaplan said..

ECB’s Schnabel Tells Germany Not to Fear Rising Public Debt

Rising public debt levels resulting from the pandemic shouldn’t be seen as a threat to the European Central Bank’s (ECB) independence, Executive Board member Schnabel said. “The pandemic is driving up government debt throughout the world,” she said. “In Germany especially, many observers are concerned about this development. They consider it a threat to the independence of the ECB.”

ECB to Decide ‘meeting by Meeting’ on Stimulus, Lane Says

The European Central Bank isn’t happy with the inflation outlook and will decide “meeting by meeting” whether more monetary stimulus will be needed, chief economist. Philip Lane said. Lane pointed to data arriving over the coming weeks that will help policy makers make their decision, dodging a question on whether updated forecasts in December might be a trigger. “I wouldn’t focus on any one meeting,”.

UK’s Disappointing Growth Puts BOE Forecasts in Deep Jeopardy

The UK economy’s poor performance in August means it looks set to fall short of Bank of England (BOE) forecasts, boosting the likelihood of more monetary stimulus. Output would have to jump a near-record 8% in September, almost four times as much as the previous month, to meet the BOE prediction of an 18.3% third-quarter expansion. August proved lackluster even with restraints at their weakest and the government subsidizing meals out.

China to Maintain ‘normal’ Monetary Policy, PBOC Chief Says

China will maintain “normal” monetary policy for as long as possible, according to the People’s Bank of China (PBOC) Governor Yi Gang. Policy makers plan to encourage a “reasonable” increase in household savings and incomes, Yi said. The country will also make sure its liquidity stays somewhat ample, and will facilitate reasonable growth of money supply and social financing, while avoiding excess liquidity flooding the economy in order to reduce fluctuations, he said.

RBA Sees Households Well Placed to Meet Debts as Lending Surges

Australians are cashed up from stimulus payments during Covid-19 restrictions that should allow them to meet their commitments, the central bank said. “Almost all households with a mortgage remain well positioned to service their debt, and many have responded to the increased uncertainty and any boost to their cash flow by increasing their prepayments,” the Reserve Bank said.

Oil Falls Back Toward US$40 as Supply Constraints Begin to Ease

Oil slipped a second day as operations in the Gulf of Mexico resume following Hurricane Delta, Libya stepped up plans to restart production and oil workers in Norway called off a strike. Brent crude for December settlement eased by US$0.29 to US$42.56 per barrel.

Source: Affin Hwang Research - 12 Oct 2020