Market movers today

In Scandinavia the Norges Bank (NB) meeting will be today’s highlight. Relative to its most recent economic projections from 13 March, NB has already reacted to the deteriorated outlook by cutting rates by an additional 75bp on 20 March. We expect NB to stay on hold today keeping the sight deposit rate at 0.25 % while maintaining an easing bias both verbally and in the rate path.

In the US, focus continues to be on initial jobless claims ahead of the April jobs report due tomorrow. Although filings for unemployment benefits have come down, the numbers remain extraordinarily high. A total of 30m Americans have lost their job in the past six weeks.

- advertisement -

In the UK, the Bank of England will likely signal its readiness to act if needed, but we think it will face some pressure to scale up its QE compared to other central banks.

Germany’s lockdown measures have been less stringent than in other European countries. Today’s industrial production figures for March will show whether this has also helped mitigate the shock to manufacturing.

Selected market news

As has been the case in recent days the US equity market lost steam in the final hours of the US session with the big indices posting between 0.5-1.0% losses. Overnight, better-than-expected export data out of China has stabilised sentiment sending CNH stronger end equity futures back in ‘green’. Brent crude is back close to USD30/bbl, while US 10Y Treasury yields have rebounded a couple of basis points. More generally US Treasury yields have seen a move higher in recent days amid the US Treasury revealing a staggering USD3tn borrowing need before June – more than triple the 2008 amount.

In the US President Donald Trump encouraged Americans to return to work even if this leads to higher infection rates and an acceleration in deaths. His remarks constitute a clear step-up of the argument that the economic damage done from the shutdowns is becoming too great and a threat to his re-election campaign. Meanwhile, Trump also backtracked on previous White House comments that the COVID-19 taskforce soon will be dismantled. Instead, the president now says that he’ll let the taskforce run indefinitely as he ‘had no idea how popular the taskforce is ‘.

While total US infections have slowed we find it somewhat worrying that most of the improvement has been driven by New York while other populous states have shown significant setbacks as shown by this reproduction number proxy chart .

The US ADP labour market report roughly matched estimates showing an April drop in employment of 20.2 million. While the ADP report has been a less than stellar predictor of the non-farm payrolls report (due tomorrow) it does show that we are in for a historical weak report on Friday. We pencil in an employment drop on Friday of 25 million, which is slightly more than the 21 million consensus.

Previous articleEuro-Zone’s Retail Sales Declined More-Than-Expected In March
Next articleUSDJPY Weakness Persists
This publication has been prepared by Danske Markets for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Markets´ research analysts are not permitted to invest in securities under coverage in their research sector. This publication is not intended for private customers in the UK or any person in the US. Danske Markets is a division of Danske Bank A/S, which is regulated by FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange. Copyright (©) Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.