| Want the lowdown on what's moving European markets in your inbox every morning? Sign up here. Good morning. The White House is considering new infrastructure spending, the Federal Reserve updated on plans to buy corporate bonds and there may be an important Brexit breakthrough. Here's what's moving markets. Spending Spree The Trump administration is preparing a nearly $1 trillion infrastructure proposal as part of its push to spur the U.S. economy back to life, according to people familiar with the plan. Most of the money would be reserved for traditional infrastructure work, like roads and bridges, but the plan would also set aside funds for 5G wireless infrastructure and rural broadband. Meanwhile, there may be a shift in sentiment in Beijing toward supporting four more years of President Donald Trump in office, amid a belief that the benefit of the erosion of America's postwar alliance network would outweigh any damage to China from trade disputes. Fed Fires Up What started as a notably red Monday on Wall Street ended on a positive note. The S&P 500 erased a 2.5% drop to close higher after the Federal Reserve said it would begin buying individual corporate bonds under its Secondary Market Corporate Credit Facility, an emergency lending program that to date has purchased only exchange-traded funds. But despite the latest optimism, there are plenty of signs -- particularly in options markets -- that traders are bracing for yet more volatility. Still, Europe and U.S. futures are firmly higher this morning, following gains in Asia, as the Fed and Trump's infrastructure plans helped boost sentiment. Brexit Oomph The U.K. and European Union seem to be on course to reach a pact over their future relationship, following weeks of lingering doubts on prospects for a deal. An hour-long video call on Monday between British Prime Minister Boris Johnson and the trading bloc's leadership injected fresh momentum into the deadlocked negotiations, according to people on both sides with knowledge of the conversation. "I don't think we are actually that far apart -- what we need to see now is a bit of oomph in the negotiations," Johnson said in a pooled TV interview. Virus Latest Amid focus on a cluster of new cases in Beijing and new cases in a number of U.S. states, data scientists predicted India's numbers may surge after it abandoned a lockdown. New Zealand, meanwhile, reported its first new cases since May 22. The U.K. saw a jump in footfall in malls and on high streets on Monday as non-essential stores reopened. On vaccines, Moderna Inc. said efficacy data for its drug could be available by as soon as Thanksgiving if everything goes well. Meanwhile, a new report suggested one in five people worldwide have an underlying health condition that puts them at risk for a severe Covid-19 illness. Coming Up… We'll hear more from the Federal Reserve later as Chairman Jerome Powell begins his semi-annual report to to the Senate Banking Committee, while data are expected to show U.K. unemployment ticked higher in April and we'll also get the latest reading of the German ZEW investor survey. In earnings, U.S.-focused construction rental firm Ashtead Group Plc reports. Finally, keep an eye on North Korea, where state media said Kim Jong Un's regime is reviewing a plan to send its army into some areas of the demilitarized zone separating the country from South Korea. What We've Been Reading This is what's caught our eye over the past 24 hours. And finally, here's what Cormac Mullen is interested in this morning Before it was so rudely interrupted by last week's sell-off, the U.S. stock rally was in the middle of a leadership rotation that had many strategists calling for long-time laggard value shares to now take the market higher. The thesis was that investors were looking through to a quicker-than-expected economic recovery, that would juice the returns of cyclical stocks more exposed to a rebound in growth. Amid jitters over the impact of a second wave of the coronavirus, that thesis faces its first major technical test. As my colleague Adam Haigh pointed out Monday, the S&P 500 Value Index has fallen back to its 50-day moving average -- a closely watched level of support. That lies just above a key Fibonacci level, that stems from the gauge's rise from its March lows. A break below both levels would signal that hopes about a quick economic rebound were being reconsidered and could re-open the debate over whether or not we are in a bear market rally. However, should the support hold over the next few sessions, optimism could build again toward the equity rally resuming.  Cormac Mullen is a Cross-Asset reporter and editor for Bloomberg News in Tokyo. Like Bloomberg's Five Things? Subscribe for unlimited access to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. | 
Post a Comment