Points of Light

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

LOCK-DOWN MEASURES HAVE EASED AND FINANCIAL CONDITIONS HAVE IMPROVED

United States: Weekly Leading Indicators

(February 2020-June 2020)

Source: Franklin Templeton Capital Market Insights Group, Federal Reserve Bank of Chicago, Federal Reserve Bank of Philadelphia, Google, Macrobond.
Important data provider notices and terms available at www.franklintempletondatasources.com.

Select Countries Where Cases of COVID-19 Have Flattened or Are Falling

Total Cases of COVID-19

Days Since First 100 Cases

Source: Johns Hopkins University

TEMPORARY LAYOFFS ACCOUNT FOR THE LION’S SHARE OF TOTAL UNEMPLOYED

Temporary Layoffs vs Permanent Job Losses

April 13, 2018 – April 30, 2020

Source: Franklin Templeton Capital Market Insights Group, Macrobond, and Bureau of Labor Statistics

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.