BoE increases QE

The Bank of England increased quantitative easing by £100bn and kept base rates at 0.1%. That takes the total to £745 bn. The program was started with an initial £200 bn back in 2009.

UK government being paid to borrow money!

The government has sold a gilt with a negative yield for the first time. An auction by the Debt Management Office of a gilt maturing in July 2023 sold at an average yield of -0.003 per cent.
A negative yield means that the government is effectively being rewarded to borrow as investors agree to be repaid slightly less than they lent.

Central banks have cut rates 148 times this year

Since the start of this year, research has calculated central banks around the world have cut their key interest rates 148 times by a cumulative 12,488 basis points (bp). While the US has cut rates by 150 bp so far this year and the European Central Bank has left rates on hold – at already very low levels – Argentina has cut by 1700bp, Ukraine by 550bp and Pakistan by 425bp. Source: Datastream, AXA IM

US oil price drops below $0

The consequence of an oil price war and the pandemic has resulted that in the first time in history the oil producers failed to find enough space in the US to store a glut of crude, forcing them to pay buyers to take it off their hands. West Texas Intermediate (WTI), the US benchmark, fell to -$37.63 a barrel, a loss of approximately 300 per cent.

UK Government funding – world first

The UK became the first country in the world to respond to the coronavirus by having its central bank directly finance its government, rather than through the intermediary of the government debt market. It involves the government’s account at the Bank of England (the “Ways and Means facility”) being extended to a temporarily unlimited amount. That will enable the government to raise money faster in the short term, avoiding the need to tap the gilts market.

US $2.2tn bailout

The US Senate has struck a $2,200,000,000,000 deal. This helped the DJIA jump 11.4% the best one-day gain since 1933. The Fed has also restarted QE. In QE3 the Fed purchased $60b per month, now they are purchasing $125b per day.