US jobless claims total 1.5 mn last week despite reopening amid Covid-19

The new report also showed that the four-week moving average, a method to iron out data volatility, decreased by 234,500 to reach 1.8 million

The number of initial jobless claims in the United States totalled 1.5 million last week despite continuous reopening efforts across the nation, the Labor Department said.In the week ending June 13, the number of Americans filing for unemployment benefits decreased by 58,000 from the prior week to 1,508,000, the 11th weekly decline in a row but remaining high on a historical basis, Xinhua news agency reported.

With the latest numbers, over 45 million initial jobless claims have been filed over the past 13 weeks as Covid-19-induced recession sent ripples through the US labor market, indicating the mounting economic fallout of the outbreak.

The new report also showed that the four-week moving average, a method to iron out data volatility, decreased by 234,500 to reach 1.8 million.The largest increases in initial claims for the week ending June 6 were in California, Massachusetts, Oklahoma, New York, and Maryland. The advance seasonally adjusted insured unemployment rate was 14.1 per cent for the week ending June 6, unchanged from the previous week’s revised rate. The total number of people claiming benefits in all programs for the week ending May 30 was 29.1 million, a decrease of 375,522 from the previous week, according to the report…

RBI follows global central banks, cuts repo by 75 bps to fight coronavirus

The move comes after the global central banks have been cutting rates to help shore up the economy amid coronavirus pandemic

Following in the footsteps of global central banks, the Reserve Bank of India (RBI) on Friday lowered the key repo rate by 75 basis points (bps) to 4.4 per cent, to help arrest the economic slowdown in the wake of the coronavirus (Covid-19) outbreak. The reverse repo rate now stands at 4 per cent, down 90 bps.

Repo rate is the rate at which a country’s central bank lends money to commercial banks, and reverse repo rate is the rate at which it borrows from them. MPC voted 4-2 in favour of the reduction of the repo rate by 75 bps, RBI Governor Shaktikanta Das said in an address to media. The governor informed that the members of the MPC met on March 24, 25 and 27. “It is our effort to ensure normal functioning of the market,” Das said. The governor further said that the economic growth and inflation projection would be highly contingent depending on the duration, spread and intensity of the pandemic. “Need of the hour is to shield the economy from the pandemic,” Das added.

Meanwhile, liquidity adjustment facility (LAF) has been reduced by 90 bps to 4 per cent while cash reserve ratio (CRR) has been slashed by 100 bps to 3 per cent. Earlier, the US Federal Reserve had lowered the interest rates, bringing it near zero, in another emergency move to help shore up the US economy amid the rapidly escalating global coronavirus pandemic. The Fed had cut interest rates by half a percentage point on March 3, too, in its first emergency cut since the financial crisis of 2008.

Coronavirus global death toll exceeds 7,400; cases now at 183,579 worldwide

Latest updates on coronavirus from around the globe in bullet points

WHAT IS CORONAVIRUS (COVID-19)

In December 2019, an outbreak of a coronavirus (officially known as – COVID-19) in China killed over 7,965 people across the globe and infected over 198,229. The virus has spread to 157 countries. In India, 137 confirmed cases have been reported so far. A 68-year-old woman from Delhi, 69-year-old man from Mumbai and a 76-year-old man from Karnataka has been confirmed dead in the country from the virus.

What is coronavirus?

Coronaviruses are a large group of viruses that are common among animals. In rare cases, they can be transmitted from animals to humans. The spikes protruding from the virus’s membrane look like the sun’s corona. It is from this that the virus gets the name ‘coronavirus’. It causes illnesses of the respiratory tract, ranging from the common cold to severe conditions like SARS. According to the World Health Organisation (WHO), a novel coronavirus (nCoV) is a new strain that has not been previously identified in humans.

• White House seeks $850-bn stimulus
• Fed unveils emergency lending
• San Francisco shuts down
• 183,579 cases worldwide, over 7,400 dead
• 1st death reported in Pakistan; cases surge to 212
• 135 deaths in Iran, raising total to 988
• 2,000 new cases in Spain as infections top 11,000, says govt
• WHO confirms two positive cases among its staff
• T20 World Cup to go ahead as scheduled, says ICC
• Euro 2020 Soccer Tournament postponed by a year
• US, China accuse each other of coronavirus fear-mongering
• 80,881 confirmed cases in China, rest of the world at 94,000
• Pfizer, BioNTech to co-develop potential coronavirus vaccine
• UK govt says ‘reasonable’ estimate is that 55,000 could have COVID-19
• US stocks rebound: Dow Jones jumps 1,000 pts intra-day
• Alphabet’s Verily tests 20 people on first day
• China approves coronavirus vaccine for clinical trials
• Spanish football coach, 21, dies of coronavirus

Coronavirus outbreak: US Fed cuts rates by 50 bps, RBI ready to take action

This is the first time in over 11 years that the Fed has cut policy rates by 50 bps or more

In the wake of volatility in the financial markets due to COVID-19 (novel coronavirus), the Reserve Bank of India (RBI) on Tuesday said it was ready to ensure that the markets ran well and confidence was maintained. It is monitoring global and domestic developments. RBI Governor Shaktikanta Das, in an interview to Bloomberg on Tuesday, said there was a strong reason for coordinated policy action. And the option before the RBI includes a rate cut and supporting the market through liquidity measures, building confidence, and other instruments to deal with emerging challenges.

Also, in a major step to arrest the economic fallout of coronavirus, the Federal Reserve cut its benchmark policy rates by 50 basis points (bps). This is the first time in over 11 years that the Fed has cut policy rates by 50 bps or more. The last time was in December 2008, when the rates were lowered by 75 bps. In the past 12 instances when rates were either hiked or cut, the extent of change was 25 bps.

“In the light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate by ½ percentage point,” the Fed said in a statement. The Dow Jones index of the US was, however, down 310.41, or 1.16 per cent, as of 11:20 pm. The Fed’s move came just after the G7 central bankers issued a statement that they would use all policy tools to achieve strong sustainable growth and safeguard against downside risks…

A Rs 1.45 trillion tax cut may undermine rate reductions in India

While the central bank has cut rates four times this year, banks have been reluctant to fully pass on Asia’s most aggressive easing amid a surge in bad loans

India’s $20 billion tax-cut boost may have an unintended effect of keeping borrowing costs high. The premium of 10-year yields over the central bank’s policy rate widened to the most since April after the surprise stimulus announced Friday raised fears the government will miss its budget deficit targets. Traders say the spread offers lenders little incentive to pass on past interest rate cuts to customers.

“Why would a bank take credit risk when they can simply borrow from the Reserve Bank of India and invest in a government bond and just sit on it,” said Vijay Sharma, executive vice president for fixed-income at PNB Gilts Ltd. in New Delhi.

While the central bank has cut rates four times this year, banks have been reluctant to fully pass on Asia’s most aggressive easing amid a surge in bad loans. The widening spread reflects worries about the government adding to its record borrowing after the major booster.

“A high term premia, together with wider credit spreads, would mean that interest rates for end-borrowers will remain high despite steep rate cuts of 110 basis points announced this year,” Neelkanth Mishra, India strategist at Credit Suisse Group AG, told BloombergQuint….

Asian indices drop as traders await US Fed Chairman Jerome Powell’s speech

The Fed released minutes of its July meeting later on Wednesday, which will provide an insight into its deliberations when cutting interest rates for the first time since the financial crisis

Equities stuttered in Asia on Wednesday as investors took a step back after recent gains, with focus now turning to a key speech by Federal Reserve chair Jerome Powell on Friday. Rising hopes for China-US trade talks have provided a much-needed lift to markets over the past two days but with few fresh catalysts, dealers are keeping their powder dry ahead of Friday’s address.

After positive signals from US President Donald Trump and some of his top advisers on Monday over progress in the talks with Beijing, and an olive branch with the delay of a ban on Huawei purchases, there have been few developments for traders to buy on.

“Our trade-war headline inspired relief rally appears to have run its course as I suspect there is still a lot of nervousness among US investors as the global economic realities are just too hard to ignore,” said Stephen Innes at Valour Markets. Hong Kong added 0.2 per cent, Shanghai was barely moved and Tokyo ended down 0.3 per cent…