The spread of COVID-19 continued to be the primary focus as markets rebounded from the lows posted but remains fragile as the story continues to develop at a rapid rate. The number of cases in the US is accelerating, and now exceeds that of China. Economic data confirms that the shutdown of large swathes of the global economy has resulted in plunging business confidence. Meanwhile the US weekly unemployment claims painted a sour picture and negative outlook, with claim numbers at a near 50-year high increasing from 282,00, to 3,283,000. Resulting in some analysts predicting that the unemployment rate could climb to 20% or higher if the worst-case scenario comes to pass and the economy is shut down for months. Those are 1930s Great Depression level numbers.
Closer to home, Chancellor Sunak announced support for the self-employed estimated to cost about £10bn, in addition to the previous raft of measures. The BoE left policy on hold at a record low of 0.1% following the recent cuts whilst announcing £200bn of asset purchases and introducing a term funding scheme for SMEs. The first set of data confirmed the worst of forecasts for the UK economy as the UK services PMI dropped to record low of 35.7. This reflects the issues and problems seen in the hospitality and retail sectors.
In the week ahead, the market will continue to focus on the development of the COVID-19 story whilst trying to articulate what it means for the economy and life as we know it. In terms of economic data, the market is braced for a negative run on data, the question is more how bad it will be and what are the resulting consequences; particular focus will be on the US labour data.
Today there is no major economic data releases
- Chinese PMI Manufacturing
- US consumer confidence
With the Western economy embarking on its COVID-19 isolation measures, the trajectory of data from China will be of interest for modelling how our economies may behave. As a result, Chinese PMI Manufacturing data may be a future template for other major economies. China’s PMIs plunged to record lows in February so today’s numbers will be keenly watched. Across the in US the consumer confidence figures will also be of interest.
- US ADP employment
- US ISM Manufacturing
As mentioned earlier, rumours circulate surrounding a G7 virtual meeting, but this remains tentative with the G20 on Monday. The ‘flash’ manufacturing and services PMIs for March will provide the first gauges of the economic impact of the pandemic on the UK and eurozone. Both are expected to have fallen sharply from their February levels.
- US weekly jobless claims
Following last week's record high US jobless claims, the market will be keen to see if there is a further wave of claims following the acceleration and seriousness of the matter in the US. The number of cases in the US is accelerating and now exceeds that of China, the market is keen to understand the impact of this.
- US Nonfarm payrolls
- US employment rate
- US ISM Non-Manufacturing
The headline figure of the week comes in the form of the US non-farm payrolls. The headline figure is expected to show the first fall in nonfarm payrolls for nearly a decade, however it may not capture the full effect as a result of the timing of the data cycle. The market will be keen to articulate the headline figure and the unemployment rate to try and understand how this may affect the economy moving forward. The ISM non-manufacturing will be closely monitored to comprehend the speed of the slowdown.
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