Another Record Daily High in New Covid-19 Infections

June 26, 2020

Over the past 24 hours, new coronavirus cases and deaths in the United States rose by 41,735 and 2,491. Total reported U.S. cases moved marginally above 2.5 million, but in a chilling portent of the possible future trend, medical officials believe that outstanding U.S. infections may be as much as ten times greater than the identified number, and many of these are in younger people.

In another piece of bad news for America that arrived late yesterday, the Fed’s annual stress tests of major banks found that in some cases, the Covid-19 pandemic could deplete reserves to the minimum mandated thresholds. Banks are to stop share buybacks and not to lift dividends.

U.S. personal consumption spending last month as some stay-at-home restrictions began to ease rebounded 8.2% following April’s 12.6% plunge, and a 4.2% drop in personal income was not quite as great as had been anticipated. On-year inflation according to the PCE price deflator edged down 0.1 percentage point to just 0.5%, while the core PCE price deflator’s 12-month rate of rise held steady at 1.0%, just half the Fed’s target.

Markets in China and Hong Kong remained closed today for the Dragon Boat Festival. Stock markets closed up 1.5% in Australia, 1.1% in South Korea, and 0.9% in India, and those in Germany, Italy, France and the U.K. show gains so far today of more than 1.0%, but U.S. futures suggest a lower open.

The dollar overnight rose 0.5% against the peso, 0.3% relative to sterling, 0.2% vis-a-vis the Australian dollar, and 0.1% versus the loonie and euro. The dollar is unchanged against the Swiss franc and yen.

The 10-year Treasury yield slipped two basis points, whereas the 10-year British gilt yield firmed that much. There’s been scant overnight net change in the prices of oil and gold.

The Bank of Mexico late yesterday authorized its fourth straight monthly cut of 50 basis points in its overnight interbank rate. Such now becomes 5.0%. Investors today learned that the Mexican monthly index of economic activity, a proxy for GDP, plunged 17.3% on month and 19.9% on year in April. Moreover, Mexico experienced a record trade deficit in May of $3.523 billion, representing a $4.48 billion adverse swing from a year earlier. Analysts had been anticipating a surplus in May.

The impact of the European Central Bank’s massive stimulus to counter the pandemic is reflected in the Bank’s report today on money and credit growth in Euroland. On-year growth in M3 accelerated to 8.2% in March-May from 5.2% in November-January. On-year growth in total credit equaled 6.2% in May versus 2.0% in the last month of 2019.

Italian consumer confidence recovered to a 4-month high in June of 100.6 from 94.3 in May but remained well below a reading of 110.5 in February. Business confidence in manufacturing printed at 79.8 this month, up from 71.5 in May but likewise still far beneath February’s reading of 98.6.

French consumer sentiment improved this month to a higher reading than forecast of 97 from 93 in May but below February’s 2020 high of 105.

Austria’s manufacturing purchasing managers index recorded the fourth straight sub-50 score in a row during June, but at 46.5 such was the highest in that streak. Readings under 50 in this diffusion index convey deteriorating activity. Output improved in June but a continuing lack of demand weighed on confidence and the overall factory sector index.

A 2.8% monthly jump in Norwegian retail sales in May catapulted their 12-month rate of increase from 3.6% in April to a 157-month high of 7.8%.

Spanish retail sales reversed April’s 20.1% swoon with a 19.3% leap in May, but the level of sales was still 19.0% weaker than a year earlier.

Swedish retail sales rose 0.5% on month and 2.4% on year (a 3-month high) in May.

Factory output in Singapore plunged 16.5% on month and posted the largest on-year drop (7.4%) in half a year.

German import price deflation in May edged marginally inward to a still steep -7.0%. Excluding oil products, import prices were 2.8% lower than a year earlier versus a 2.6% on-year drop of core import prices in April.

Swedish producer price inflation was its most negative in four years at -3.8% in May.

Icelandic CPI inflation in June held steady at May’s 6-month high of 2.6%.

Tokyo total and core CPI inflation in June was 0.3% and 0.2%. In Japan, officials include energy in core. When that component is also excluded, underlying CPI inflation dipped 0.1 percentage point to 0.4%.

Still to come: U. Michigan index of U.S. consumer sentiment.

Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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