Data releases from around the world this week showed the growing impact of COVID-19 on economic output. March PMIs for many countries in Asia, Europe (including the UK) and North America pointed to big falls in both manufacturing and services activity. However, it should be noted that Chinese data rebounded sharply from historic lows in February; we should remember that the data compares month on month. Three of the four Chinese measures moved back expansionary territory, suggesting that the economy is growing again as lockdown measures start to be lifted. As they were the first nation to lockdown the market will closely watch the data for financial modelling and clues on how long it will take for economic activity to rebound elsewhere.
US data was once again disappointing with all eyes focusing on the labour data in particular. Over the last two weeks, unemployment claims have risen by an unprecedented 9.9 million, with another large out-turn is likely this week. Following the unemployment claims, the non-farm payrolls reported a decline of 701,000 jobs till mid-March, abruptly winding down a historic run of 113 straight months of job growth. Next month’s headline figure will be closely monitored as this does not incorporate the worse of the COVID-19 effects.
Overnight, Sterling dipped lower at the Asian open following news that Prime Minister Johnson had been admitted to hospital and spent the night there on his doctors advise following his reaction to COVID-19. The final GfK consumer confidence reading for March recorded a very sharp decline to -34 from -7 while Sterling remained on the defensive, although with support below 1.2250.
It is a shortened week with Easter on the weekend. COVID-19 news will continue to dominate headlines. Meanwhile, economic data is light from the UK, the main focus will be on the monthly GDP for the latest statement on growth during this period. In the US, the data the market will continue to focus on will be the unemployment claims following the unprecedented numbers over the last two weeks. EU finance ministers will continue to discuss a European Coronavirus Bond, it is hoped that a compromise deal between leaders will be met by the end of the week.
- US JOLT (job openings)
- US consumer credit
With a lot of focus on the US labour data currently the market will focus on all formats. The job openings during the reported month, excluding the farming industry is likely to confirm what is already known but will still be focused on. In addition, with job losses appearing to be rife, consumer credit will also be monitored.
- OPEC meeting (tentative)
- FOMC minutes
Following the whipsaw pricing we have seen in oil over the past few weeks, any development to the story will be closely deciphered for clues on future pricing. Brent crude oil price has moved back above $32bbl from a low below $23bbl based on reports of Chinese buying and rumours as lockdown was lifted. In addition, President Trump tweeted last Thursday that he was brokering a deal between Saudi Arabia and Russia (the breakdown in talks between the two resulted in the crash in price).
- UK GDP (Feb)
- US Jobless claims
UK GDP estimate for February seems only of historical interest, although a 0.3% monthly rise is expected that will support the view that UK economic growth was turning up before the pandemic hit. The US jobless claims provide further clues on the state of the labour market. Over the last two weeks, these have risen by an unprecedented 9.9 million and another figure of circa 5 million is expected.
- UK/EU Good Friday
- US Inflation
It will be a quieter day with the UK and EU on bank holiday weekend for Easter. US inflation data will be monitored although the market will be more likely deciphering yesterday’s jobless claims number and articulating what this means for the US economy.
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