Reviewing the economic data from last week:
European markets return after the Easter break with a sense of cautious optimism. Whilst the number of global Covid-19 cases topped 1.5 million there is a sense that the curve could be flattening, with China already easing restrictions in the city of Wuhan where the pandemic began.
Closer to home, Austria will begin lifting its coronavirus restrictions this morning after it came to a standstill on March 16th when it introduced lockdown measures on the whole country, except key supermarkets and medical facilities. The relaxing of lockdown measures will be a stepped approach and Austria will be monitored closely as a potential model for other European nations.
Here in the UK, PM Boris Johnson was discharged from hospital after spending a period in intensive care.
The US Dollar broadly under-performed with risk sentiment improving and global equity markets set to gain for the second week of three consecutive weeks. Sterling sentiment also improved in line PM Johnson’s health. US data continues to remain under scrutiny after US weekly initial unemployment claims surged by more than expected, posting another uber high figure 6.6m; totalling over 16m in the past three weeks.
Looking to the shortened week ahead:
The Covid-19 lockdown easing measures in China and Austria will be under the microscope for evidence of green shoots. Chinese data will be of interest as they emerge from lockdown and US data, which is arguably at the eye of the storm, will also be watched closely. Overnight, US President Trump announced that a plan to reopen the economy would be completed shortly. This follows some US states forming regional pacts to coordinate a gradual reopening of their economies.
G20 finance ministers and central bank governors will meet virtually to review the fallout from the Covid-19 pandemic and discuss what further joint measures are likely to be needed to stabilise the economy now as well as when it starts to recover.
- G20 meeting
US economic data comes under the spotlight and will give some idea of the impact of the Covid-19 on the economy. Whilst we have already seen the impact on unemployment claims as that is a weekly figure, the monthly retail sales for March are due for release today along with the manufacturing out of the Empire State (New York and surrounding area).
- US retail sales
- US Empire manufacturing
Once again, the weekly unemployment claims will be scrutinised for clues on the size of the unemployment problem that might emerge in the US. Over the past 3 weeks, jobless claims have grown by over 16m with many economists concluding that the unemployment rate is currently at 14%. An additional 5m is expected to be add which could heighten fears of the unemployment rate growing close to 25%, a level last seen during the Great Depression.
- US Jobless claims
- US Building permits
- US Philly Fed manufacturing
China will release Q1 GDP as well as March data including retail sales and industrial production. China was the first country to be placed into lockdown back in January. The market will decipher Chinese data as a template for modelling the impact on the economy. The consensus forecast is a quarter-on-quarter contraction of around 10%
- Chinese GDP
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