The US records a large rise in COVID-19 cases since May
Yesterday, the US recorded a steep rise in new cases not seen since May 8th, date during which the virus had recorded its highest rate of spread in the country. 57,236 cases were recorded, a 2.05% rise that surpasses the stipulated 1% by authorities in order to consider the virus is “under control”. Figures recorded the highest daily rise of cases in the country and suggest that the spread is in full acceleration in the Southern and Western-Center part of the US. The bad news is that these figures showed up days before Independence Day celebrations, in which President Trump will lead an event attended by thousands of people who have not been asked to take sanitary precautions; a sign that contrasts with the increasing obligatory orders to use a face mask in some States. The Centers for Disease Control and Prevention has warned that death figures could reach 160 thousand as soon as July. The long weekend will keep markets closed in the US today, but since yesterday`s closing key indexes indicate that concerns increase among investors due to an outbreak that threatens to close parts of the economy and prevent a sturdy recovery. The number of deaths have also started to accelerate, and even though labs will be closed during the long weekend and the number of recorded cases may recede, the virus`s spread will be clear to investors at the end of next week.
Merkel calls on Europe to approve recovery plan
Chancellor of Germany Angela Merkel called on member countries of the European Union to approve a 750 billion euro aid package that has been in negotiations since last month – still without success. Merkel assured that the road to recovery will be difficult and a common commitment is necessary, “considering the current state of the economy, time is pressing and every day counts”, she said in front of the country`s upper house as Germany becomes EU President for the next 6 months. The challenges Europe faces are large, as it should keep the pandemic under control and simultaneously attempts to continue reopening its economy. The 27 member countries of the Union have not reached a consensus to approve the fiscal package that would boost recovery. The differences mainly concern the package`s funding, as Austria, Denmark, Sweden, Holland and Finland are against the debt issuance backed by the block. At the moment, every country has carried out its own package to aid companies and citizens. The UK, Italy, Spain, Austria and Switzerland have recently extended their aid programs and have prevented the loss of 50 million jobs in the region in addition to easing fiscal conditions for businesses. This has decreased the little certainty there was regarding a sustainable recovery in the economy in an environment in which businesses resume activities with much lower demand due to the concerns raised by the pandemic.
PBOC delays stimulus in light of a recovery
The People`s Bank of China (PBOC) has started to slow down its monetary stimulus actions in light of signs of a firm economic recovery in the country and has not announced any new capital injections into the financial system, which the institution promised to carry out two weeks ago. The Central Bank`s Governor, Yi Gang, has warned markets that they must prepare for the last accommodating monetary policy. Money market rates in China and 10 year bond yields have been increasing gradually, but firmly, without the Central Bank interfering; a sign of the Bank`s limited disposal to intervene. The majority of the stimuli has come from fiscal policies, after a record issuance of bonds in order to fund infrastructure projects on behalf of local governments. The Central Bank`s position defies market expectations, which forecasted aggressive stimuli in the world`s largest economy in order to boost a recovery that is still uncertain.