Points of Light

Amid the pandemic, there are reasons for optimism—positive
signs of our road to recovery.

MONETARY POLICY: RESPONSE TO COVID-19 HAS BEEN BROAD BASED

Countries Providing Monetary Stimulus in 2020
(as of April 30, 2020)

Monetary Policy Responses
(YTD through April 30, 2020)

  • The Fed’s 150bp in cuts in addition to expected $7.8 trillion expansion of the balance sheet including support for commercial paper, money markets, corporate credit, and municipals
  • Canada’s central bank cut 50 bps and expanding balance sheet by $190 bn
  • The European Central Bank expected to expand balance sheet by $3.4 trillion including bond repurchases, extended targeted long-term refinancing options to small to mid-sized enterprises, and introduced Pandemic Bond Buying Program
  • The Bank of England lowered capital requirements for banks (‘counter-cyclical capital buffer’) and expected to expand balance sheet by $900 bn
  • The Bank of Japan is expected to grow balance sheet by $600 bn including an annual run rate of $113 bn in ETF purchases, $1.7bn in Japan-REIT purchases, and $20 billion of commercial and corporate bonds
  • The People’s Bank of China cut interest rates on 7-day and 14-day reverse repurchase agreements by 20bp, announced $245 bn expansion of reverse repo, and will use open market operations, standing lending facilities, and other tools to ensure interbank liquidity is adequate
Source: Franklin Templeton Capital Market Insights Group, Bloomberg

Monetary Policy: Majority of Central Banks Globally Are Easing

Percentage of Central Banks Cutting Interest Rates in the Last Six Months January 1998-March 2020

January 1998 - March 2020

Source: Franklin Templeton Capital Market Insights Group, BIS, Fed, CBE, QCB, CBUAE, SBP, Central Bank of Taiwan, MSCI, Macrobond.
Important data provider notices and terms available at www.franklintempletondatasources.com.

FISCAL POLICY: RESPONSE TO COVID-19 HAS ACCELERATED ABOVE LEVELS FROM PRIOR CRISES

Countries Providing Fiscal Stimulus in 2020
(as of April 30, 2020)

Fiscal Policy Responses
(YTD through April 30, 2020)

  • United States has provided $8.6bn in healthcare funding, House coronavirus bill providing $400 bn, and $2 trillion package in Senate and the Paycheck Protection Program, in total equivalent to roughly 12.1% of GDP
  • Germany has approved $135 bn (3.5% of GDP) in increased spending
  • China has announced measures totaling 4% of GDP including rental cuts, VAT tax cuts, lowered tariffs on power,  reduced corporate insurance, subsidies for unemployment,, and healthcare spending
  • Canada has a total of 4.9% of GDP approved to provide wage subsidies, provide healthcare funding, and provide tax deferments
  • United Kingdom packages total 5.2% of GDP including job retention, loan interruption, and deferred taxes
  • Japan announced packages worth 5.4% of in the form of grants to small firms, healthcare spending, and support for individuals
  • Italy announced stimulus equivalent to roughly 3.2% of GDP
  • Hong Kong announced stimulus equivalent to roughly 9.9% of current GDP
Source: Franklin Templeton Capital Market Insights Group, Bloomberg

PARTS OF CHINA’S ECONOMY ARE BEGINNING TO RECOVER

China, Weekly Vehicle Sales and Registrations, Passenger Cars

April 2019-April 2020

Source: Franklin Templeton Capital Market Insights Group, CPCA, Macrobond.
Important data provider notices and terms available at www.franklintempletondatasources.com.