Flight to safety returns as the risk selloff continues
- RBNZ cuts key interest rate to 0.25% from 1.0% in emergency decision
- RBNZ's Ha says QE program to be ready for month of May, if needed
- Federal Reserve acts on a Sunday evening to slash rates to near zero
- Fed's Powell says there will be no FOMC meeting this week - action today instead
- Fed's Powell says he does not think negative rates in the US are appropriate
- RBA says it is ready to purchase Australian government bonds
- BOJ maintains policy rate, increases pace of ETF purchases
- BOJ: May increase or cut ETF goal depending on situation
Coronavirus developments continue to see a more negative spin as the virus outbreak continues to shut down the world economy, putting pressure on equities and risk once again to kick start the new week.
The Friday rebound looks to be no more than a dead cat bounce as US futures hit limit down once again, falling by 5% earlier in Asia Pacific trading.
Amid a host of central bank action today, the yen is holding firm as equities slump while Treasury yields sink heavily as the Fed brought rates back down to the zero bound and announced QE measures.
The lack of decisive action by the BOJ also didn't help to weaken the yen with USD/JPY falling from 106.70-90 to 106.20-40 currently after the central bank decision.
Meanwhile, the kiwi is the laggard after the RBNZ stepped in with a 75 bps rate cut and the negative risk mood isn't helping. The other risk currencies i.e. aussie and loonie are also laggards on the day with oil prices also falling 3.7% to nearly $30.
Looking ahead, coordinated central bank easing will steal the headlines today but it is doing little to alleviate pressure on the market as all they can do is help to ease liquidity and financial strains - but not address core issues posed by the virus outbreak.
Some action is better than none but unless governments can sort out their feet and provide monumental fiscal stimulus to buy time for a vaccine/cure, the hole just gets deeper for equities and the market as the situation continues to develop.
