ChinesePMIdataandFedBullard'semploymentprediction

Dow Jones Industrial average went up by 3% in the yesterday trade. The prime reasoning attributed to this rise was hope that some pharma companies are getting a medical combination in place to fight the virus.

China’s official PMI data bounced to 52 in March from a record low of 35.7 in February. This data would give a ray of hope to the other countries across the world as they would look to assume that a similar bounce back can happen in their countries also. Asian stocks were up post the news of Chinese data. Indian stock markets traded in line with the Asian peers and are currently in after registering a 3% fall yesterday.

In India, RBI announced further measures to shore up the bond markets. RBI on Monday said that they will issue certain series of govt securities under the fully accessible route. These special securities will attract no FPI limits. RBI also raised the FPI limits for corporate bonds to 15 % from 9% for year 2020-21. These notifications are part of the plan which was announced in the budget last year for broad basing the foreign investor base in Indian papers. The 10 year govt bond yield which closed at 6.21 yesterday opened 6.10 today as the RBI move added to the positive sentiment. Indian bonds have also been helped so far by the continued fall in the fall of crude prices and a measured fiscal response by the govt to the corona virus threat.

On the point of oil prices, the market was abuzz yesterday by the news of phone call between the Russian Premier Vladimir Putin and US President Donald Trump. They discussed the oil prices and agreed that the respective energy ministers of US and Russia will hold further talks. Brent Oil trades at close to 22 $/bbl currently.

In a televised interview President of St Louis Fed James Bullard said that unemployment rate in US can range from 10% to 42% in the coming days. He says that the final number would depend on how the second order impacts of Corona Virus play out. He says that some businesses which depend heavily on people being in close proximity may be vulnerable for a long time and the final jobless numbers would rest on how the business owners there respond to the crisis. Now this statement by Fed President if analysed at a broader level points out to some systemic issues. First being that Fed with all the research power at its disposal giving a 32% range for an economic metric which is in its mandate to track and act. Secondly all the other predictions like GDP growth, inflation etc rest on a similar shaky edifice.