By Lorcan Roche Kelly
The rapid rise in the number of people out of work is expected to show another increase today, with economists forecasting 4.5 million more claims when the data is published at 8:30 a.m. Eastern Time this morning. A Gallup poll showed that a quarter of working Americans believe it is very or fairly likely they will lose their jobs in the next 12 months. The wave of losses which began with restaurant, hotel and factory workers is now hitting office and support workers. All of which means predictions of a 20% unemployment rate are becoming more and more realistic.
In this crisis, economists are becoming ever-more reliant on high frequency and survey data. The one thing almost all of that data has in common is the bleakness. Today’s Purchasing Managers’ Indexes are no different. In Europe, services PMIs plunged with the number for Germany dropping to 15.9 and France to 10.4, far below the 50 level that marks the divide between expansion and contraction. Composite PMI for the euro area plunged to an astonishingly low 13.5. A similar number for the U.K. dropped to a record low of 12.9. Data for the U.S. economy is published at 9:45 a.m.
The House is set to vote in favor of the $484 billion stimulus package today before sending it to President Donald Trump for his signature. Focus is already turning to the next spending measure as the damage to the economy continues, with House Speaker Nancy Pelosi saying “we’re ready to go on to the next bill.” In Europe, leaders are meeting today in an attempt to agree on a $2.2 trillion aid plan. Yesterday the European Central Bank agreed to accept below investment-grade debt as collateral for its operations in a bid to ensure no repeat of past liquidity crises.
The push-pull of bad economic data and the possibility for more stimulus has equity investors mostly sitting on their hands today. Overnight the MSCI Asia Pacific Index gained 0.8% while Japan’s Topix index closed 1.4% higher after yesterday’s tumble. In Europe, the Stoxx 600 Index was 0.2% higher at 5:50 a.m. with oil and gas companies the best performers as the crude market seems to be settling down at last. S&P 500 futures fluctuated, the 10-year Treasury yield was at 0.617% and gold gained.
While jobless claims and PMI numbers will get the most eyeballs, March new home sales data at 10:00 a.m. will also get attention with transactions forecast to fall by 16%. Kansas City Fed April manufacturing activity is likely to show a drop to a record low at 11:00 a.m. Intel Corp., Eli Lilly & Co. and Blackstone Group Inc. are among the big names reporting today.