Trump says will ask Congress for more small business funds if money runs out

WASHINGTON (Reuters) – U.S. President Donald Trump said on Saturday he would ask Congress for more money to make loans to small businesses struggling with the economic fallout from the coronavirus outbreak if the original $349 billion allocated in a fiscal stimulus bill runs out.

“I will immediately ask Congress for more money to support small businesses under the @ppploan if the allocated money runs out,” Trump wrote in a post on Twitter.

The launch of the small business bailout fund has been rocky since it opened on Friday morning.

Tens of thousands of businesses have swamped lenders, community bankers have complained of an inability to access the Small Business Administration (SBA)’s system and the Treasury Department was still issuing updated guidance and form templates on Friday afternoon.

As of Friday evening, lenders originated more than 17,000 loans valued at about $5.4 billion under the program, Jovita Carranza, the administrator of the Small Business Administration, said in a tweet.

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TREASURIES-Investors disregard grim jobs report, again

 (Updates with market activity, Fed purchase plan details)
    By Ross Kerber
    BOSTON, April 3 (Reuters) - U.S. Treasury yields held steady
on Friday despite a grim federal jobs report, in a replay of a
similar dynamic from the day before, as investors tried to grasp
the full impact of the COVID-19 pandemic caused by the new
coronavirus.
    The yield on the benchmark U.S. 10-year note was
down 2.3 basis points at 0.6041% in afternoon trading. 
    That was close to where it stood at 8:30 a.m. EDT (1230 GMT)
when a closely watched U.S. Labor Department report showed the
American economy shed 701,000 jobs in March. The figure signaled
the abrupt end of a historic 113 straight months of employment
growth as stringent measures to control the novel coronavirus
outbreak shuttered businesses and factories, confirming a
recession is under way.
    Yields did rise in the afternoon, with the 10-year note
hitting a session high of 0.623%, before falling back, after the
Federal Reserve outlined a schedule of Treasury purchases for
next week that will be less aggressive than its current
pace.
    For the most part, the trading echoed that of Thursday when 
investors also disregarded a record rise in jobless claims to
more than 6 million.
   Analysts said the muted market reaction to the dramatic jobs
reports reinforced how investors are focused more on measures of
public health and the effectiveness of government responses.
    "This is the smallest market impact I’ve ever seen from the
payrolls number," said Justin Lederer, Treasury analyst for
Cantor Fitzgerald.
    "This data doesn't mean that much, until we get a better
picture of how the whole situation plays out," he said.
    Wall Street's main indexes fell more than 1.5% on Friday.

    A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes, seen as an indicator of economic
expectations, was at 37 basis points, nearly the same as 
Thursday's close.
    The two-year  U.S. Treasury yield, which
typically moves in step with interest rate expectations, was up
1.1 basis points at 0.2308% in afternoon trading.
    Since Wednesday, the figure several times dropped close to
0.20%, a level last reached in 2013, as analysts judge it 
unlikely the Fed will raise interest rates anytime soon.
    The 10-year note's yield was also within sight of its
all-time low of 0.318% reached on March 9, and far below the
levels near 2% seen at the start of the year. 
    With bond yields so low, dividend-paying stocks are getting
a fresh look from investors. 
    
    April 3 Friday 4:50PM New York / 2050 GMT
                               Price                  
 US T BONDS JUN0               182-2/32     0-17/32   
 10YR TNotes JUN0              139          0-28/256  
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.0975       0.0991    0.003
 Six-month bills               0.15         0.1522    0.002
 Two-year note                 100-73/256   0.2308    0.011
 Three-year note               100-148/256  0.3024    0.023
 Five-year note                100-142/256  0.3875    -0.001
 Seven-year note               100-182/256  0.5212    -0.015
 10-year note                  108-144/256  0.6041    -0.023
 30-year bond                  119-124/256  1.2195    -0.049
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        23.00         0.00    
 spread                                               
 U.S. 3-year dollar swap        13.75        -1.25    
 spread                                               
 U.S. 5-year dollar swap        11.25         0.00    
 spread                                               
 U.S. 10-year dollar swap        4.75        -0.25    
 spread                                               
 U.S. 30-year dollar swap      -43.00        -1.75    
 spread                                               
 
    

 (Reporting by Ross Kerber; editing by Jonathan Oatis)
  

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U.S. high-grade corporate bond issuance sets weekly record

NEW YORK, April 2 (Reuters) – Highly rated U.S. corporate bond issuers raised a record $110.502 billion this week, according to Refinitiv IFR data, as fears that the coronavirus pandemic may limit access to capital markets stoked borrowing.

A $19 billion bond from T-Mobile to finance its acquisition of rival telecom Sprint on Thursday helped push this week’s issuance past the record $109.1 billion set last week.

The market for new investment-grade debt has boomed since the Federal Reserve and Treasury Department last week announced monetary and fiscal stimulus to help contain the economic fallout from the pandemic. Although the investment-grade sector will benefit from both, the default rate for riskier companies is expected to triple to 10% by December, according to S&P Global, and investors may lose their appetite for any corporate debt.

“The preponderance of our day is spent talking to clients about capital markets access. It started with cruise ships, moved to airlines and then auto companies. Companies are just looking at day-to-day volatility in the markets and not taking access to the markets for granted,” said Richard Zogheb, head of global debt capital markets at Citi.

Although demand remains strong, borrowing costs have risen.

Sysco, which distributes food and equipment to restaurants and has been hard hit by the industry’s shutdown, issued a four-part $4 billion bond on Monday, but at twice the cost of its previous issuance. Coupons on the new issue ranged between 5.65% and 6.6%, versus 2.4% and 3.3% in February.

“The reality is that the window is open right now. Companies are coming to market but they’re paying a hefty concession,” said Andrew Brenner, head of international fixed income at National Alliance Securities.

“Even though spreads have widened, they’ve cheapened things up to make sure the deals go well. They desperately need cash and they don’t want to have to go to lines of credit if they don’t have to.”

Even as issuers find investor appetite for new debt, investment grade funds have seen record outflows in recent weeks. Nearly $8.5 billion was pulled from high-grade bond funds in the week to April 1, the fifth straight week of outflows, according to Lipper data. This week’s outflow, however, was smaller than the last, as the Fed’s pledge to buy bonds and the passage of a $2 trillion stimulus package have reassured some investors.

Other notable deals this week included a $20 billion issue from tech giant Oracle and a $6.5 billion deal from cruise line Carnival Corp.

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Wall Street gains as oil soars 30%

(Reuters) – Wall Street bounced on Thursday as hints of a deal between Russia and Saudi Arabia drove a record 30% surge in oil prices, outweighing the shock of a jump in U.S. jobless claims past 6 million.

The S&P energy index .SPNY, down by half this year, gained 12%, with double-digit gains for majors Exxon Mobil Corp (XOM.N) and Chevron Corp (CVX.N) helping drive a more than 1% rise for both the S&P 500 .SPX and the Dow. .DJI

U.S. President Donald Trump said he expected Russia’s Vladimir Putin and the Saudi Crown Prince to announce an output cut of 10 million to 15 million barrels per day, putting Brent on track for its biggest one-day gain on record. [O/R]

Apache Corp (APA.N), Diamondback Energy Inc (FANG.O) and Helmerich Payne (HP.N) all gained between 18% and 22% as minds for a moment moved away from the economic damage being wrought by the coronavirus pandemic.

“The surge in crude is helping the mood, so we’re seeing some relief in markets that have been hammered,” said Richard Steinberg, chief market strategist at Colony Group, in Florida.

The first quarter of 2020 was among U.S. stock markets’ worst in history, and analysts predict further declines as shutdowns to combat the COVID-19 outbreak drive more corporate budget cuts.

Boeing Co (BA.N), a symbol of America’s industrial might, said on Thursday it would offer buyout and early retirement packages to employees, as a near collapse in business activity crushes liquidity and sparks mass staff furloughs.

Initial claims for unemployment benefits last week exceeded the top end of analysts’ estimates at 5.25 million as more states enforce sweeping stay-at-home orders to curtail the coronavirus pandemic.

“The U.S. labor market has never experienced such a disruption,” said Mike Loewengart, managing director of investment strategy at E*TRADE Financial.

“Most will likely say the United States is sitting squarely in a recession right now, but the real question at hand is for how long and to what extent.”

At 10:54 a.m. ET, the Dow Jones Industrial Average .DJI was up 284.00 points, or 1.36%, at 21,227.51, the S&P 500 .SPX was up 33.21 points, or 1.34%, at 2,503.71. The Nasdaq Composite .IXIC was up 66.19 points, or 0.90%, at 7,426.77.

Walgreens Boots Alliance Inc (WBA.O) fell 6% after the drugstore retailer reported a steep decline in U.S same-store sales in the last week of March. [L4N2BQ32Z]

Advancing issues outnumbered decliners more than 2-to-1 on the NYSE and on the Nasdaq.

The S&P index recorded no new 52-week high and seven new lows, while the Nasdaq recorded two new highs and 53 new lows.

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U.S. light vehicle sales in March fall 27% on month as virus outbreak intensifies

(Reuters) – Light vehicle sales in the United States fell nearly 27% in March compared with a month earlier, data released by an automotive research group showed on Wednesday, as the coronavirus outbreak intensified and shuttered dealerships across much of the country.

Last month, 992,392 light vehicles were sold, down from about 1.4 million in February, according to Wards Intelligence.

The seasonally adjusted annualized rate for U.S. cars and light trucks sales was estimated at 11.4 million units, down from 16.8 million units in February, Wards Intelligence said.

Moody’s Investors Service said on Friday that U.S. light vehicle sales would fall at least 15% in 2020 as the ratings agency sharply cut its 2020 outlook for global auto sales, with Western Europe expected to take the biggest hit.

The development comes as the United States is looking at an increasing number of deaths from the coronavirus outbreak, with Reuters’ tally showing more than 4,500 deaths and over 200,000 infections.

President Donald Trump and his top healthcare advisers urged Americans to follow strict social distancing measures ahead of a “tough two weeks” that could see at least 100,000 deaths from the coronavirus.

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Dow starts second quarter with 900-point slide as virus anxiety grows

(Reuters) – The Dow Jones Industrial Average fell more than 900 points on Wednesday as a plunge in new orders for U.S.-made goods and a dire warning on U.S. death toll from the coronavirus pushed investors away from stocks to safer assets.

The blue-chip Dow and the S&P 500 were set to extend losses after suffering their worst first quarter as U.S. President Donald Trump warned Americans of a “painful” two weeks ahead, with health officials modeling an enormous jump in virus-related deaths.

The flight to safety pushed longer-term yields on U.S. Treasuries lower, putting pressure on interest-sensitive bank stocks .SPXBK, which fell 7%. The financials sector .SPSY was among the biggest drags on the S&P 500. [US/]

“People are concerned with the economic reality of both the depth as well as the duration of what this episode will be for the global economy,” said Eric Freedman, chief investment officer at U.S. Bank Wealth Management in North Carolina.

“There is room for further downside and we are still advocating for caution.”

S&P 500 companies have lost about $6.7 trillion in market value so far this year despite an unprecedented round of fiscal and monetary stimulus to thwart a recession.

Goldman Sachs now expects sequential real U.S. GDP to plummet 34% in the second quarter on an annualized basis.

Meanwhile, the collapse in oil prices claimed its first major casualty, with shale producer Whiting Petroleum (WLL.N) filing for Chapter 11 bankruptcy protection. Its shares nearly halved in value.

The energy sector .SPNY shed another 6%, with experts now saying oil prices could touch single digits, exacerbated by a share tussle among top producers as the world runs out of storage space.

Shares of airlines and cruise operators fell further with United Airlines (UAL.O) and Carnival Corp (CCL.N) plunging 18%, making them the biggest decliners on the S&P 500.

At 13:00 p.m. ET, the Dow Jones Industrial Average .DJI was down 919.95 points, or 4.20%, at 20,997.21, the S&P 500 .SPX was down 113.37 points, or 4.39%, at 2,471.22. The Nasdaq Composite .IXIC was down 303.22 points, or 3.94%, at 7,396.88.

With the quarterly earnings season set to begin in two weeks, S&P 500 firms are expected to enter an earnings recession in 2020, falling 3.7% in the first quarter and 9.6% in the second.

However, some analysts expressed optimism.

“This will take some time to overcome, but markets will rise in the second quarter on expectations of economic data sharply improving in the second half of 2020,” said Barry Bannister, head of institutional equity strategy at Stifel Financial in Baltimore.

Declining issues outnumbered advancers for a 10.95-to-1 ratio on the NYSE and a 7.05-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week high and 11 new lows, while the Nasdaq recorded seven new highs and 53 new lows.

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Rouhani: U.S. has missed opportunity to lift sanctions on Iran amid coronavirus

DUBAI (Reuters) – Iran’s president said on Wednesday the United States had missed a historical opportunity to lift sanctions on his country during the coronavirus outbreak, though he said the penalties had not hampered Tehran’s fight against the infection.

“It was a great opportunity for Americans to apologise … and to lift the unjust and unfair sanctions on Iran, Hassan Rouhani said in a televised cabinet meeting.

“The sanctions have failed to hamper our efforts to fight against the coronavirus outbreak.”

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U.S. Air Force finds additional deficiency in Boeing's aerial fuel system

(Reuters) – The U.S. Air Force announced on Monday an additional deficiency in the KC-46 Pegasus aerial fuel system built by Boeing (BA.N), classifying it at the Category I level, meaning it is a major technical issue that may endanger the aircrew and aircraft.

Boeing is contractually obligated to remedy the deficiency at no additional cost to the government, the Air Force said in a statement.

“The Service’s KC-46 Program Office first identified excessive fuel leaks in July of 2019 after an air refueling test,” the Air Force said, adding it is working with Boeing to determine the root cause of the issue and take corrective action.

It is the latest problem for Boeing, which has been struggling to get its 737 MAX aircraft flying again following two fatal crashes in 2018 and 2019.

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U.S. Congress eyes next steps in coronavirus response

WASHINGTON (Reuters) – Three days after passing a $2.2 trillion package aimed at easing the heavy economic blow of the coronavirus pandemic, the U.S. Congress on Monday was looking at additional steps it might take as the country’s death toll continued to rise.

Democrats who control the House of Representatives were discussing boosting payments to low- and middle-income workers, likely to be among the most vulnerable as companies lay off and furlough millions of workers, as well as eliminating out-of-pocket costs for coronavirus medical treatment.

House Speaker Nancy Pelosi said she would work with Republicans to craft a bill that also could provide added protections for front-line workers and substantially more support for state and local governments to deal with one of the largest public health crises in U.S. history.

Pelosi, the top U.S. Democrat said she does not expect new legislation to be completed until sometime after Easter, which is on April 12.

“We must do more to help our helpers in this moment of national crisis,” she told reporters on a conference call, adding that delays in producing ventilators and medical protective equipment “will cost lives that should not have to be lost.”

Republican President Donald Trump’s administration signaled that it might seek congressional authorization for more funds to a small business loan program.

House Minority Leader Kevin McCarthy, a Republican, has said he was not sure if it was necessary to augment the first three packages totaling over $2.3 trillion with a fourth bill. A spokesman was not immediately available for comment on Monday.

But an aide to the House Appropriations Committee, which must provide funding for some of Washington’s response to the coronavirus, said the Democratic-led panel was in the early stages of work on “phase four” of response legislation.

Nearly 3,000 Americans have died and more than 157,000 have been sickened by the fast-spreading virus that causes COVID-19. It has prompted widespread closures of schools and businesses across the nation and thrown millions out of work.

Other ideas being floated were the opening of a special enrollment period on the Affordable Care Act, also known as Obamacare, and steps to lower health insurance premiums, as well as financial assistance to help laid-off workers keep temporary health insurance.

Congress is trying to respond to the crisis even as its normal operations are interrupted, with most lawmakers advised to stay in their home states. The Senate is in recess until April 20 and the House at least until then.

Last week, several senior House Democrats, along with key Democratic senators, called for Congress to take the next step in coronavirus response by ensuring that treatment and vaccines are free of charge for patients. That would build on legislation enacted earlier this month providing for free coronavirus testing.

Republican Senator Lisa Murkowski of Alaska told reporters in the U.S. Capitol on Monday said she was concerned about Congress failing to address mental health problems that could stem from the faltering economy, coupled with the impact of self-quarantined people living in close quarters for extended periods.

“I’m reaching out to the various shelters in the state of Alaska to just kind of understand what it is that they’re seeing in the near term,” Murkowski said.

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U.S. House not expected to meet sooner than April 20, Hoyer says

WASHINGTON (Reuters) – The U.S. House of Representatives is not expected to meet again in regular session sooner than Monday April 20, House Majority Leader Steny Hoyer, a Democrat, advised members on Monday.

“Members are further advised that if the House is required to take action on critical legislation related to the coronavirus response or other legislative priorities, members will be given sufficient notice to return to Washington, DC,” said the advisory from Hoyer’s office.

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