Weekly Market Insight

Latest Economic & Market Update 16th June 2020

16th June 2020

Good afternoon, it is 16th June 2020 and here is your economic and market update from BlackBee.

Today we focus on:
• New stimulus mutes concerns of a second wave of coronavirus and pushes stocks higher.
• The number of people receiving the Pandemic Unemployment Payments declining.

• FED to begin buying individual corporate bonds.
Early trading on Monday saw fears of a second wave of the coronavirus push US stocks and the price of oil sharply lower. Later in the day, the FED announced that it would start buying debt of US companies to support the economy. The announcement reversed the mood among investors and resulted in a rally in the price of oil and US stocks, with all three major indices in the US closing higher for the day.

A few weeks ago, the number of people receiving the Pandemic Unemployment Payment (PUP) in Ireland was around the 600,000 mark. Since these highs, the number of people receiving the payment has continued to decline and stood at 498,700 this week. Over 60,600 employers are currently registered for the Temporary Covid-19 Wage Subsidy Scheme with an estimated number of 400,000 employees being supported in their most recent paycheck. Economic recovery will be gradual and the reduction in the number of people receiving the PUP is a positive as businesses reopen and people return to work. Although there are many people returning to work, the Temporary Wage Subsidy Scheme will remain vital to many businesses to stay afloat.

To date under the FED’s secondary Market Corporate Credit Facility, only exchange-traded funds have been purchased. The FED announced that starting Tuesday, it will begin to buy individual corporate bonds. The FED has built an index of all bonds in the secondary market that have been issued by US companies that meet the criteria of the programme. The index simplifies the process by eliminating the need for companies to certify that they are eligible for the programme and therefore removes concerns that the FED’s ability to purchase bonds would be impaired. The long-awaited FED Main Street Lending Programme for small and medium-sized businesses has also been opened. The FED will purchase 95% of the loans made through the programme.

Best & Worst Performers of Large Cap Stocks on Monday
Click the image to enlarge

Global Market Update
(as at close of markets 15/06/2020)