Stocks Drop to More Than One Week Low; Yields Rise

US stocks dropped to the lowest levels in more than a week and Treasury yields edged higher amid growing concern rising borrowing costs could sap a rally that’s driven equity values to historic highs. The S&P 500 fell by 0.44% to 3,913.97 while Dow Jones was down 119.68 points (0.38%) to 31,493.34.

US Jobless Claims Hit Four-week High in Fresh Labor Setback

Applications for US state unemployment insurance jumped to a four-week high, indicating the labor market is suffering fresh setbacks even as the coronavirus pandemic shows signs of ebbing. Initial jobless claims in regular state programs totaled 861,000 in the week ended Feb. 13, up 13,000 from the prior week, Labor Department data showed. Last week’s report had originally shown a decrease but was revised up to show a 36,000 increase.

Yellen Defends Need for US$1.9 Trillion Plan After Strong Data

Treasury Secretary Janet Yellen defended the need for US$1.9 trillion in pandemicrelief spending -- the second-largest emergency aid bill on record -- even with recent strength in retail sales and US stock values. Yellen pointed to more than 9 million Americans still unemployed compared with before the Covid-19 crisis hit, with 4 million having left the workforce entirely. She also cited the danger of a “permanent, life-long toll” for people put out of work over the long haul.

ECB Is Said to Weigh Disclosing Climate Risk in Bond Programs

The European Central Bank is strongly considering disclosing climate risks in its bond programs and will now focus on collecting the data that will help achieve that, according to officials familiar with the matter. ECB policy makers discussed the issue in a meeting as part of the central bank’s strategic review, said the officials, who asked not to be identified. There was also broad agreement during the seminar on incorporating climate risks in the institution’s economic analysis.

UK Risks Jobless Recovery From Covid Crisis, BOE Official Says

The UK economy risks a jobless recovery from the coronavirus, with surging gross domestic product and lingering unemployment, a policy maker at the Bank of England said. Michael Saunders, a member of the central bank’s Monetary Policy Committee, said the pandemic has gone on longer than anticipated and is hurting the finances of businesses and households.

Bank Indonesia Cuts Rates and Outlook as the Recovery Stalls

Indonesia’s central bank cut its benchmark interest rate to a record low and downgraded its growth outlook amid fears that a resurgence in Covid-19 cases is slowing the economy’s recovery. Bank Indonesia slashed the seven-day reverse repurchase rate by 25 basis points to 3.5%, the lowest level since the rate was introduced in 2016.

Australia Unemployment Falls Further as Recovery Intensifies

Australia’s unemployment rate declined in January as a second round of central bank stimulus combined with a big-spending government budget accelerated the economy’s recovery and further boosted hiring. The jobless rate fell to 6.4% from 6.6% in December, versus economists’ estimate of 6.5%, data from the statistics bureau.

Oil Slides With US Refinery Outages Boding Poorly for Demand

Oil fell the most in nearly a month alongside a broader market selloff with the ongoing energy crisis in the US likely keeping refineries shut for another week. Brent crude for April settlement fell US$0.41 to US$63.93 per barrel.

Source: Affin Hwang Research - 19 Feb 2021