(as at close of markets 26/03/2020)
Yesterday saw the report that US jobless claims surged way beyond previous record levels, and way above anticipated numbers. The recorded 3.3m claimants in one week broke the previous record of 695,000 in 1982, making it the biggest number since records began in 1967. The anticipated number was 1.7m, but the 3.3m still doesn’t account for those people don’t qualify for jobless welfare or those that weren’t able to access the claim site when it crashed due to the volumes accessing it.
This kind of evidence is key to analysing economic impact. Most of those affected were recorded as being in restaurant, hotel, entertainment, transport, manufacturing and even healthcare. A weakness in the employment affects everyone.
In policy news, the ECB is breaking its own rules once again as it toes the line of a fiscal union, which won’t be well received by EU nations. The EU has a currency union but fiscal policy is generally the realm of each country independently. The ECB will break their rules by pumping liquidity into short term markets and not restricting how much of any countries debt it will purchase, to avoid surges in Spain and Italian debt. In another break it’s making involves the term of securities it can purchase. It normally restricts purchases to securities of a year or more, but has lowered the bar to 70 days to provide liquidity in the short term market.
With nuances in the economy having far reaching effects, it’s a very interesting time to be looking at the markets.