On Tuesday, global markets were in light trading, awaiting this week’s big event. For now, despite renewed economic activity in many parts of the world, market concerns remain, supporting risk aversion to some extent. On the global outbreak, an internal trump administration document obtained from us media reports predicts that the daily death toll will reach about 3,000 by June 1, almost double the current figure of about 1,750. The White House’s latest response: not a White House document! White House spokesman Judd Deere said Thursday that it had not been referred to the novel coronavirus response task force or subjected to an interagency review. On the stimulus front, the us government is again doing a super job: as COVID 19 hits the economy, the us Treasury expects to add $3tn to the net stock of tradable treasuries in the second quarter of this year, a quarterly record, to fund trillions of dollars in stimulus and bail-out funds. The us economy has been hit hard by the new outbreak, forcing the Treasury to step up its efforts to stimulate the economy.
Global outbreak: us media report internal government document: “death toll may reach 3,000 by June 1” White House: not White House document!
“As trump urges states to reopen their economies, his administration is privately predicting a steady rise in novel coronavirus infections and deaths in the coming weeks,” the New York times and other reports said on May 4.
An internal trump administration forecast document obtained by the newspaper showed that by June 1, the number of new deaths per day would reach about 3,000, almost double the current rate of about 1,750 deaths per day.
The New York times reported Thursday that the document was based on government modeling and was compiled in a chart by the federal emergency management agency. It also predicted that by the end of the month, there would be about 200,000 new cases a day, compared with the current rate of about 25,000.
The New York times said the Numbers underscored a sobering reality: despite the lockdown measures imposed over the past seven weeks in many parts of the United States to slow the spread of the virus, significant risks remain that reopening economic activity would make things worse.
“This is not a document from the White House, nor has it been submitted to the novel coronavirus response task force or subjected to an interagency review,” White House spokeswoman Judd Deere said Thursday in response to an internal document cited in the New York times report. “these data do not reflect any models or data analyzed by the task force.”
“The President’s guidelines for a phased opening of the United States are a science-driven approach that the federal government’s top health and infectious disease experts agree on.” Judd Deere said.
In addition, according to media reports, the institute for health indicators and evaluation (IHME) at the university of Washington said on the same day, the institute of health indicators and evaluation (IHME) has revised one of its widely watched epidemic prediction models. The revised model predicts that by August 4, at least 134,000 people in the United States will have died from the outbreak.
According to the institute, the revised modeling strategy will use mobile data reported by four different mobile phone providers to reflect the impact of premature relaxation of the “keep social distance” policy on the development of the epidemic.
As of 7:48 p.m. Beijing time (2:48 p.m. GMT), nine countries had more than 100,000 confirmed covid-19 cases, with more than 1.21 million confirmed cases and 69,709 deaths in the United States, according to Worldometers. Spain, Italy, Britain and France have also suffered more than 25,000 deaths.
A senior administration official has confirmed that the White House is further restricting members of the White House outbreak response task force from appearing before congress, CNN reported. The official said team members should focus on their own work rather than preparing testimony. The report says team members have been informed of the new policy.
The U.S. Treasury’s super move: the $3 trillion national debt
The U.S. Treasury said on Monday it plans to borrow nearly $3 trillion in the second quarter, more than five times the previous record, as the federal government spends aggressively to mitigate the impact of a new outbreak on the U.S. economy.
In a statement, the Treasury said it would borrow $2,999 trillion in the april-june quarter, up from the previous record of $1.8 trillion for the full fiscal year of 2009. “That’s more than we normally spend in a year,” says a senior Treasury official. That compares with net borrowing of $1.28 trillion in the Treasury’s last fiscal year.
Monday’s estimate was $3.055 trillion higher than the original second-quarter target in early February, when it was unclear whether novel coronavirus would spread widely in the United States. At the time, it appeared that the federal government would repay $56 billion of debt in the current quarter, prompting the Treasury to expect negative net new tradable debt for the period.
But in the wake of the rapid spread of novel coronavirus and the ensuing economic blow, congress has approved nearly $3 trillion to help individuals and companies weather a shutdown to slow the spread of the virus.
In addition, the Treasury expects to borrow an additional $677bn in the third quarter. In the first quarter, the Treasury borrowed $477 billion.
The new borrowing target is five times the previous quarterly record, when the country borrowed heavily in the second half of 2008 to fight the financial crisis. Mike Lorizio, a senior fixed-income trader at Manulife Investment Management in Boston, said that even before the new outbreak, future financing needs would increase. But now, all plans have been abandoned.
Since March 1, the federal debt has increased by $1.5 trillion, or 6.4 percent, to $24.9 trillion. In the six months to march, the budget deficit totaled $744 billion, likely the largest in U.S. history.
According to the Treasury, the surge in borrowing demand was due to “the impact of COVID 19, including new legislation to help individuals and businesses spend, tax changes including a delay in personal and business taxes, and an increase in the assumed annual Treasury cash balance.”
But there is clearly more to it than that, because taking into account the next quarter (july-september), the Treasury now expects to issue a further $677bn of privately held net tradable debt, assuming a cash balance of $800bn at the end of September. In other words, the Treasury will borrow a record $3.7tn in the six months from April to September.
It also explains why the fed, which has bought $2.5 trillion of securities in the past six weeks, is now monetizing twice its net Treasury issuance: because it is preparing for that possibility.
Commenting on the us Treasury’s prodigy of issuance, the new debt king gundlach wrote on social media: ‘why tax when the us can borrow unlimited amounts of money…
The U.S. government faces a $4 trillion deficit as it tries to cushion the impact of business closures with stimulus measures. The government has so far relied heavily on Treasury issuance to meet its spending needs, but it has also begun to expand its auctions of interest-bearing bonds.
For now, the process is expected to continue. In February, the Treasury also said it would release details of a planned new 20-year bond issue in May. The uncertainty over when the us economy will return to normal makes it hard to predict just how much debt will be in the future.
“If all these restarts fail, we may see the deficit explode again or things may get better and some of the financing needs may not be as dire as expected. These estimates have a huge margin of error, “said Jon Hill, interest rate strategist at BMO Capital Markets in New York.
“Current funding needs also prevent Treasury from having to ‘make room’ for new 20-year issues by cutting back on 10-year or 30-year notes,” the Jefferies report said. “at this point, Treasury needs to find every possible way to raise funds as efficiently as possible.”
Asked if the market had the capacity to absorb such a large amount of debt in just three months, a senior Treasury official said: “we do believe the market has the capacity.