08.07.20

CME Article: Stimulus solidarity rallies euro & implications of US borrowing over $3T. By Blu Putnam, Chief Economist, CME Group

Stimulus solidarity rallies euro & implications of US borrowing over $3T

By Blu Putnam, Chief Economist, CME Group

Euro Rallies Amid Europe's Pandemic Response

• EU members to collectively raise 750 billion euros from bonds issued.

• Ground-breaking move to stimulate sagging economy rallies euro.

• Debt issuance binds 27 EU members in a coordinated fiscal initiative.

• Member-nations hit the hardest by pandemic will receive grants.

Implications of US Borrowing $3 Trillion in H1 2020

• US Treasury issued more than $3 trillion in new debt securities in H1 2020.

• Private local, foreign investors were top buyers, Fed took 46% of issuance.

• Without Fed involvement, US Treasury yields could be much higher.

• Higher gold, weaker dollar signaling rising inflation expectations?