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Dollar surges, stocks, oil fall as ECB fails to stop panic
The dollar surged, bonds plunged and global markets struggled to find their footing on Thursday as the European Central Bank’s latest promise of stimulus provided only brief solace while the world struggles to contain the coronavirus pandemic. U.S. stock futures EScv1 fell 2%. The Australian dollar was crushed, falling 3.3% to a more than 17-year low, and Asian markets gave up initial gains made after the ECB had announced a bond-buying program. By midmorning, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS had fallen 4% to an almost four-year low. Australia’s benchmark erased an early 3% rise to trade 2% in the red. Korea's Kospi .KS11 fell 6% and the won hit a decade-low even as the central bank was buying dollars to prop up the currency.
Markets in Hong Kong and China fell-Cap#2 Selling extended across almost all asset classes. Benchmark 10-year sovereign bond yields in Australia, New Zealand, Malaysia, Korea and Singapore and Thailand surged. In currency markets, everything except the dollar and - thanks to the ECB, the euro - collapsed. Sterling GBP= fell 1% to $1.1495. The New Zealand dollar NZD=D3 fell 3% to $0.5540 and the Aussie AUD=D3 was pounded to $0.5592. The Reserve Bank of Australia is due to make an out-of-cycle policy announcement at 0330 GMT at which it is expected to cut rates and introduce quantitative easing for the first time. U.S. 10-year Treasuries US10YT=RR, usually a haven in times of turmoil, were steady but have suffered their sharpest two-day selloff in nearly 20 years. Gold XAU= is down 3% for the week. https://www.reuters.com/article/us-global-markets/dollar-surges-stocks-fall-as-ecb-fails-to-stop-panic-idUSKBN215459
BOJ Adds Liquidity With $9.2 Billion Unscheduled Bond-Buy Offer The Bank of Japan offered to buy 1 trillion yen ($9.2 billion) of government bonds in another unscheduled operation, keeping up with its pledge to provide liquidity to markets. The yield on 10-year benchmark bonds extended its decline and was down three basis points for the day at 0.04% after the central bank said it plans to buy debt across the curve with maturities up to 25 years. The yield climbed to its highest level since December 2018 on Wednesday. https://www.bloomberg.com//news/articles/2020-03-19/boj-adds-liquidity-with-9-2-billion-unscheduled-bond-buy-offer BOJ Admits It Has Lost 3 Trillion Yen On Its Equity Purchases Despite Literally Printing Money Out Of Thin Air
A week after we reported that the BOJ had bought a record amount of ETFs in a desperate attempt to stabilize its illiquid stock market, where the central bank now owns over 73% of all ETFs, Kuroda bought a whopping 121.6BN yen of ETFs on Tuesday, the most on record, and just one day after the BOJ doubled the upper limit of ETFs it can purchase to 12 trillion yen, without however answering where it will get all those ETFs from. The purchases in its core ETF program jumped by 20% to 120.4BN yen from the previous record of 100.2BN yen; while ETFs bought in the BOJ's "physical and human capital" program - whereby the BOJ directly admits it is rewarding companies for pursuing policies that it finds appealing such as higher jobs - remain at 1.2b yen. Finally, the BOJ's J-REIT purchases rose to 1.5BN yen from 1.2BN yen.
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