Stocks Drop From Record Highs; Bond Yields Rise

US stocks retreated after climbing to an all-time high. Treasuries fell with the dollar. The S&P 500 declined by 0.41% to 4,124.66 while Dow Jones was up 53.62 points (0.16%) to 33,730.89.

Fed Says US Economic Activity Has Picked Up to Moderate Pace

US economic activity has picked up pace and consumer spending has improved, Fed said. “National economic activity accelerated to a moderate pace from late February to early April,” according to the Fed’s Beige Book. They noted that consumer spending strengthened and the reports on tourism were more upbeat, bolstered by a pickup in demand for leisure activities and travel.

Trudeau’s Stimulus Push Runs Into Trouble With Economy Heating Up

Prime Minister Justin Trudeau is about to make a pitch for tens of billions of dollars in new spending after racking up one of the developed world’s largest deficits. There’s one problem: Canada’s economy doesn’t need it. Not only are Canadians sitting on hundreds of billions in unspent cash -- partly because Trudeau’s virus relief programs were among the most generous anywhere.

ECB’s Villeroy Sees Path to Crisis Exit by March Next Year

The European Central Bank could end its pandemic emergency program within less than a year while adapting its monetary policy tools to keep supporting the economy after the crisis, French Governor Francois Villeroy de Galhau said. He also added that it would not mean an abrupt tightening of their monetary policy, reinvestments under PEPP would go on.They could also have net asset purchases with our other program.

Italy Plans Up to 45 Billion Euros of Extra Deficit Spending

Italy’s government plans to seek approval for as much as 45 billion euros of additional borrowing this year to keep the economy afloat as the coronavirus lockdown drags on, according to two people familiar with the matter. Prime Minister Mario Draghi’s cabinet discussed the plan and the country’s economic situation but the government postponed a decision on the details of the extra deficit request.

Indonesia Embraces Higher Borrowing Costs to Sell More Bonds

Indonesia offered higher yields to sell the most bonds in two months, testing appetite for emerging-market assets as the government continues to build up a buffer for stimulus spending. The finance ministry sold 21.68 trillion rupiah of non-Islamic debt, excluding Tbills. That’s the biggest since the sale in mid-February and compared with just 3.75 trillion rupiah. The larger amount sold saw the bid-to-cover ratio plunge to 1.86.

Philippines May Miss Growth Target as Covid Cases Surge

The Philippines may miss its target of at least 6.5% economic growth this year after a resurgence of Covid-19 infections forced the capital into a two-week lockdown, Economic Planning Secretary Karl Chua said. First-quarter gross domestic product performance may be close to zero compared to a year earlier, but will be a lot better than the final three months of 2020, when the economy contracted 8.3%, Chua said.

Oil Surges to Highest in a Month With US Demand Picking Up

Oil surged to the highest level in a month (breaking out of a weeks-long holding pattern) as shrinking crude stockpiles in the US supported hopes for a global demand recovery. Brent crude for June settlement rose US$2.91 to US$66.58 per barrel.

Source: Affin Hwang Research - 15 Apr 2021