Central Banks

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U.S. Banks reported weaker loan demand for commercial real estate but stronger loan demand for residential real estate The Federal Reserve reported in it's July 2020 Senior Loan Officer Opinion Survey on Bank Lending Practices.

The Federal Reserve kept rates unchanged at their July meeting, kept QE infinity open with TALF for open-ended Treasuries, MBS and corporate bonds in amounts needed. Fed will continue to buy paper at current pace of $120B/month of Treasuries and MBS combined. Compare that to $40B/month in QE3.

ECB left rates unchanged as expected in July with controversial Christine Lagarde at the helm. The bank left deposit facility interest rates at .-50% and held steady rates on the main refinancing operations and on the marginal lending facility unchanged. 

The Bank of Canada left the key lending rate at 0.25 percent on Wednesday as expected. BoC will hold interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved.

The Federal Reserve completed its annual stress test on Thursday for 2020 and additional sensitivity analyses that the Board conducted in light of the coronavirus event. The Fed capped bank dividend payments and suspended share-buybacks for the third quarter.

The Federal Reserve kept rates unchanged, kept QE infinity open with TALF for open-ended Treasuries, MBS and corporate bonds in amounts needed. Fed will continue to buy paper at current pace of $120B/month of Treasuries and MBS combined. Compared that to $40B/month in QE3.

Germany's Angela Merkel and France's Emmanuel Macron have propesed a €500 billion European coronavirus reconstruction plan. The aim is the recovery fund that should give grants, not loans to EU member states.

The Federal Reserve released it's twice–yearly report on financial hazards in it's 2020 financial stability report warning that the coronavirus (COVID-19) pandemic has caused tremendous human and economic hard-ship across the United States and around the world. They warned on assets if the pandemic worsens.

The Federal Reserve kept rates unchanged, kept QE infinity open with TALF for open-ended Treasuries, MBS and corporate bonds in amounts needed. Fed will continue to assess Cornoavirus damages to the economy.

The ECB said it is taking steps to mitigate the impact of possible ratings downgrades on collateral availability and will grandfather until September 2021 eligibility of marketable assets in euro system credit operations. The market has been jittery about the Italian credit situation.

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