By Lorcan Roche Kelly
This week’s initial jobless claims data at 8:30 a.m. Eastern Time is the most hotly anticipated in years as it will be the first hard data on the severity of the economic hit from the coronavirus-spurred shutdowns. The median estimate of economists is for 1.6 million with forecasts running as high as 4 million. White House chief economic adviser Larry Kudlow said the number would show a “very large increase.” Canada saw jobless claims of nearly 1 million, representing nearly 5% of the total workforce.
The Senate passed the historic $2 trillion stimulus bill last night in a 96-0 vote following intense negotiations between Republicans and Democrats on the make-up of the package. The measures include loans to corporations, tax breaks and direct payments to companies and individuals. Democrats won a major concession in securing independent oversight of the $500 billion slated for distressed companies, but there are fears the move could slow the flow of cash. The House is scheduled to vote on the bill tomorrow, and President Donald Trump said he would sign it immediately.
There was an unusually blunt message from the World Health Organisation for governments, with the body saying political leaders should stop wasting time in the fight against the spread of the coronavirus. WHO Director-General Tedros Adhanom Ghebreyesus said the first window of opportunity to act has already been squandered. The death toll from the virus in the U.S. passed 1,000 as states continue to tighten movement restrictions, and Governors call for more funding to help fight the outbreak. Evidence of the global economic fallout piles up by the day, with Singapore estimating its economy shrunk the most in a decade.
ECB goes all in
The European Central Bank published the legal text of its 750 billion euro ($819 billion) Pandemic Emergency Purchase Program (PEPP) which revealed the bank will scrap the issuer limits on purchases of bonds, and widened the scope of buying to include instrument with as little as 70 days left to maturity. “The decision removes virtually all constraints on asset purchases,” Frederik Ducrozet, global strategist at Bank Pictet & Cie. in Geneva, said. Euro-area sovereign bonds are rallying as markets digest the details of the move, with short-dated Italian debt dropping as much as 13 basis points and Greek bonds surging this morning. Speaking of central banks, the Bank of England announces its latest policy decision at 8:00 a.m. this morning.
Now that the stimulus bill has been passed, global equity investors seem to be turning back to worrying about the virus, with markets taking a turn lower today. Overnight, the MSCI Asia Pacific Index gained 0.1% with a mixed performance across the region. Japan’s Topix index dropped 1.8% while India’s Sensex Index jumped over 4%. In Europe, the Stoxx 600 Index was 1.5% lower at 5:55 a.m. with all but one industry group trading in the red. S&P 500 futures pointed to a drop at the open, the 10-year Treasury yield was at 0.811% and gold slipped.