Bank strategists concerned by rapid market rise | Coronavirus resurgence puts brakes on US rebound | Fed ends intervention in repo market
July 9, 2020
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Bank strategists concerned by rapid market rise
(Johannes Eisele/AFP via Getty Images)
Strategists at firms including Bank of America and Societe Generale have expressed concern about the rapid rise of the stock market, saying a downturn could trigger an exodus. "When the trade turns, everyone wants to get out at the same time because they were only there when the trade was working," says Benjamin Bowler, chief global equity derivatives strategist at BofA.
Full Story: BNN Bloomberg (Canada) (7/8) 
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Coronavirus outbreaks in the US are undercutting a nascent economic recovery, forcing businesses in several states to reduce or re-suspend operations. Commercial foot traffic and restaurant-seating rates have declined, while unemployment has risen in some states.

Modern Money Murmurs: With the three most populous states now reversing course on their re-openings, I've officially run out of optimism for a quick economic recovery.

Full Story: The Wall Street Journal (tiered subscription model) (7/8) 
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The Federal Reserve has ended 10 months of intervention in the market for short-term funding. Intervention began in September and peaked in March.
Full Story: Financial Times (subscription required) (7/8) 
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Emergency lending facilities from the Federal Reserve have accomplished the aim of stabilizing markets, despite modest use of some of them, says Daleep Singh, head of the markets group at the Federal Reserve Bank of New York. The central bank will change its approach if conditions require it, Singh says.
Full Story: Reuters (7/8),  MarketWatch (7/8) 
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A proposal by the US Federal Housing Finance Agency could reduce Fannie Mae and Freddie Mac's incentive to continue selling credit-risk-transfer securities, which let the agencies offload risk. The proposal would raise the entities' capital standards by tens of billions of dollars.
Full Story: Bloomberg (tiered subscription model) (7/8) 
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Eric Rosengren, president of the Federal Reserve Bank of Boston, says the Fed's Main Street Lending Program is likely to become more widely used over time, despite slow uptake since its creation in April. Rosengren says the Boston Fed has seen more interest in the program recently from a number of sectors and he expects this to increase if challenging economic conditions intensify and lengthen.
Full Story: The Wall Street Journal (tiered subscription model) (7/8) 
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Fintech Airwallex is building a global payments system with the aim of unseating Swift's worldwide dominance. Valued in April at $1.8 billion, Airwallex is supported by major entities from several sectors.
Full Story: Financial Times (subscription required) (7/7) 
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Industry Watch
FICO has introduced a scoring model to measure a consumer's ability to withstand an economic downturn. The FICO Resilience Index is expected to be used by banks in tandem with the traditional credit scoring model, which measures a consumer's credit risk but does not consider economic conditions.
Full Story: The Washington Post (tiered subscription model) (7/7),  Business Insider (7/6) 
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Bank of America revised its plans to bring 180,000 staff members back to the office after a surge in COVID-19 cases. The bank will reportedly wait until after Labor Day to bring staff members back to the office.
Full Story: WSOC-TV (Charlotte, N.C.) (7/8) 
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Liquidity has not fully recovered from the coronavirus pandemic, leaving markets exposed to potential shocks, according to a report from JPMorgan Chase strategists. "Liquidity conditions have improved considerably, though not fully, and overall functioning has mostly been restored, but markets remain in an unstable equilibrium and vulnerable to shocks," the report states.
Full Story: Bloomberg (tiered subscription model) (7/9) 
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    About the Editor
    Colin Hogan
    Colin Hogan
    Colin Hogan is the editor of several SmartBrief newsletters focused on the global financial system and capital markets.

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