| The Federal Reserve could now have as much as $4.5 trillion to keep credit flowing. Spain has its deadliest day yet. And central banks are looking to Japan for lessons on rolling out quantitative easing. Here are some of the things people in markets are talking about today. The Federal Reserve could now have as much as $4.5 trillion to keep credit flowing and make direct loans to U.S. businesses through the massive coronavirus stimulus bill being considered by U.S. lawmakers. The bipartisan agreement, which still needs to be passed by the Senate and House and signed into law by President Donald Trump, will include $454 billion in funds for the Treasury to backstop emergency actions by the Fed to support the U.S. economy, Senator Patrick Toomey said on Wednesday. The central bank will work with the U.S. Treasury to use that money as a backstop against credit risk as it supports markets for corporate and short-term state and local debt, while also loaning directly to businesses. Its lending facilities have typically required a loss-absorbing cushion of around 10% from the Treasury to protect it from loans that don't get paid back. Congress's stimulus package, meanwhile, keeps meeting snags. A dispute in the Senate over expanded unemployment benefits for lower wage workers is threatening to delay passage of the $2 trillion coronavirus relief package as several Republicans demanded changes. Independent Senator Bernie Sanders said he would hold up a vote if the legislation is altered. Stocks in Asia were poised for a mixed start, following the first back-to-back gains for global equities since mid-February, as negotiations in Congress continued toward a vote on the U.S. stimulus bill later this week. Earlier, the S&P 500 ended about 1% higher after a rally of more than 5% fizzled amid a dispute in the Senate. Futures in Japan slipped, while contracts gained in Hong Kong and Australia. Republican senators raised objections to the unemployment benefits section of the stimulus bill, and Vermont Senator Bernie Sanders threatened to hold up the legislation unless those objections were dropped. The dollar declined for a second day against its major peers. Treasuries edged lower. Elsewhere, gold drifted lower after a squeeze of historic proportions pushed its prices to the biggest one-day gain since November 2008 on Tuesday. The closing of refineries and demand for physical gold had caused a disconnect between prices in London and New York. As central banks around the world reignite quantitative easing programs or adopt them for the first time, Japan's key focus of controlling bond yields rather than a quota of purchases is being explored. When the Reserve Bank of Australia broke the emergency glass on March 19, it set a target for the yield on three-year Australian government bonds of around 0.25%, in line with its benchmark policy rate that was lowered to this level. The advantage of targeting a yield rather than promising to buy a specific amount of bonds is the greater flexibility it allows monetary authorities. If bond markets behave and yields fall into line with the targets, the program can be easier to manage with fewer purchases needed. That's an approach the BOJ adopted in late 2016 — it targets a 10-year yield around zero — after its earlier QE program appeared on an unsustainable path given the huge volume of bond buying and resulting market distortions that were involved. Federal Reserve Governor Lael Brainard has floated the prospect for yield curve control in the U.S. recently too. Here's what central banks should be considering. As the virus's spread expands, here's the latest on how countries are coping. Spain had its deadliest day yet, while in Britain, the government moved to shut Parliament and Prince Charles tested positive. European Union leaders inched toward a rescue package. Germany unleashed a historic bailout. Russian President Vladimir Putin even postponed a public vote on constitutional changes next month that would allow him to rule to 2036. In the U.S. Governor Andrew Cuomo of New York said the stimulus package working its way through Congress is inadequate. He also restricted access to a malaria drug that President Donald Trump has touted as a treatment for the novel coronavirus. In Brazil, President Jair Bolsonaro, echoing Trump, urged the country to resume normal life to protect the economy. That may be too late for Thailand, which faces its biggest economic contraction since the Asian crisis. Singapore reported its biggest daily jump in new cases. Meanwhile, U.S. President Donald Trump said he would stop using the "China virus" label to deescalate the blame game with Beijing. Australian Prime Minister Scott Morrison is trying to thread the needle as he battles to save the country's economy and contain a health crisis as coronavirus cases surge. As leaders the world over are discovering, something may have to give. The conservative leader's response to the outbreak so far appears to fall somewhere between the total lockdowns announced by New Zealand Prime Minister Jacinda Ardern and India's Narendra Modi, and that of U.S. President Donald Trump, who says he wants his economy re-opened by Easter despite warnings that would create a human catastrophe. He's faced criticism from some who believe the government is over-reacting and from those who want more stringent controls. Confirmed cases have surged five-fold in the past week to more than 2,400, while thousands have already lost their jobs — sending waves of newly unemployed into long queues outside welfare agencies nationwide. Meanwhile, here's how the virus is impacting Australian firms' guidance. What We've Been Reading This is what's caught our eye over the past 24 hours. And finally, here's what Tracy's interested in this morning "We want our rents waived!" cry the tenants of a whole bunch of commercial buildings. "We don't really know how to do that legally!" replies the complex ecosystem of mortgage investors attached to those buildings. Bloomberg is reporting that some big retailers in the U.S., like Mattress Firm and Subway, plan to stop paying their rent during the coronavirus containment efforts. The story is set up as a battle between tenants and landlords, but really you could frame it as an epic legal drama. Even if landlords wanted to pause or reduce rents during a public health crisis, it's not entirely clear just how they would implement this type of forbearance. At issue is the complex nature of the U.S. mortgage system, where these loans often get bundled together into securitized products and sold on to end investors who then collect payments due to them through entities known as mortgage servicers.  As veteran analyst Richard Hill at Morgan Stanley put it: "These borrowers will need forbearance from their respective lenders, but that will require a modification of loan documents, and we believe the system is simply not prepared to respond to the wave of requests that are likely to be received." A potentially larger issue is the role of servicers, who must forward payments due to investors even if they are no longer collecting them from borrowers. Servicers must keep doing that until they can officially declare a loan non-recoverable (which is something that often requires an in-person appraisal) or work out some other type of loan modification. Those modifications take a while, however, and —per analysts at JPMorgan — "Everything will be on a case-by-case basis." In other words, the system is not set up to handle a drop in cash flows that is this sudden, severe and widespread. The mortgage market may well be where tail risk in the form of a pandemic meets both operational and credit risk. The hope is that the government can help. U.S. housing agencies have already set out some payment deferral plans for parts of the market, such as residential mortgages with a government guarantee and some multi-family loans. But more might still need to be done — for instance, by expanding some of the Federal Reserve's Talf program to include commercial mortgage-backed securities, or by allowing the central bank to lend to mortgage servicers. Watch this (messy) space. You can follow Bloomberg's Tracy Alloway at @tracyalloway. Follow Bloomberg on Telegram for all the investment news and analysis you need. | 
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