EU Agrees on Recovery Fund: €390bn in Grants


The NASDAQ rebounded from last week’s losses to surge 2.51% on Monday on the back of significant gains for Amazon, Tesla, among other tech stocks. The DOW just about closed in the green at 0.03% while the S&P rose 0.84%. Yield on 10Y USTs closed lower at 0.6102%.


The EU finally agreed on a €750 billion package aimed at relieving member countries from pandemic economic pressures. €390 billion of the fund will be set aside as grants to economically weaker states; the figure is some way from the €500 billion originally proposed but marks some victory given the opposition that had come from more frugal northern states. EU peripheries opened stronger following the early morning announcement of the deal while the euro went as high as $1.1469 having closed at $1.1448 on Monday.


Asian stocks were higher on Tuesday amid hopes for the development of a coronavirus vaccine with Oxford University scientists saying a positive immune response had been prompted in trial participants. The ASX led gains, up 2.58% while the HANG SENG and the NIKKEI rose 2.07% and 0.73% respectively. The CSI closed with comparatively muted gains of 0.20%.


Brazilian economists trimmed their expectations for the year’s expected economic contraction to 5.95%. This was the major notable move in the latest central bank survey with the end-2020 exchange rate expected to remain stable at 5.20BRL/USD while the Selic is expected to rise to 3% in 2021 from 2% in 2022. The real closed stronger at 5.3335 to the dollar while BRAZIL 30s traded higher, in the mid 99s.


The Central Bank of Nigeria held rates at its latest MPC meeting amid concerns about increasing inflation. Inflation has been ticking higher since August 2019 and stood at 12.60% in June slightly above the benchmark rate at 12.50%. the unchanged position could help prevent additional weakening of the naira after an official devaluation to 381 to the dollar earlier in July. NGERIA 30s traded about flat in the low 94s.