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Week Ahead: Markets taking a breather, will it last?

Ben Weiss, Friday, 20 March 2020

WeekAhead_MarketVolatility_blog

...And breathe. After one of the most action-packed weeks ever in the markets, last week saw the markets take somewhat of a collective breather. Of course, volatility was still rife but in comparison to the 1,000-point + drops that frequently occured, it was relatively calm. So, with a quiet week scheduled on the economic-announcement front, will this partial lull continue?

US economy set for a hit

The Dow received a lot of coverage, along with most major global indices, as it lost over 10,000 points in the space of a couple of weeks. And rightly so, but despite the catastrophic losses the dollar remains strong compared to other currencies. But the US economy might be set for a major hit this week. 

With many businesses shutting down, mass layoffs of staff have occurred so Jobless Claims have come into focus. It’s expected that jobless claims this week could reach a record at more than two million - up from just 281,000 last week. The figures will be crucial in setting out where exactly the US is in mitigating the economic impact of the virus and determining how severely the economy might be hit in the coming weeks. Jobless Claims are announced at 12:30 on Thursday. Expect a reaction if estimations prove to be accurate.

UK data 

UK Retail Sales will be interesting data to watch on Thursday morning. Retail is somewhat of a double-edged sword at the moment for the UK economy. On the one hand, you have the major supermarkets and local shops being sold out regularly of fresh produce, toiletries and food essentials. Yet on the other, you have highstreet fashion brands and sellers of goods struggling to combat withering demand. Where will the equilibrium lie? 

Consumer Price Index (CPI) figures are also released this week that will determine how quickly the UK economy is growing/shrinking. With transport and hospitality large weightings in the index, a fall in inflation wouldn’t be unexpected. This will be a key measure in gauging to what extent the UK economy has been impacted by the coronavirus. 

BoE monetary policy committee meeting

The MPC will meet for yet another policy meeting to determine interest rates for the foreseeable future. On Thursday, the MPC held a special meeting where it was decided rates would be cut again down to a record-low of 0.1%. With the next MPC meeting happening on Thursday, could we see negative interest rates for the first time ever, despite the previous stance of the Bank of England stating negative rates might be counter-productive? Announcement will be at 12:00. 

ECONOMIC CALENDAR (all times are GMT)

 

Monday, 23rd March

15:00 EUR Consumer Confidence

Tuesday, 24th March

08:15 EUR French Flash Services PMI

08:15 EUR French Flash Manufacturing PMI

08:30 EUR German Flash Services PMI

08:30 EUR German Flash Manufacturing PMI

09:00 EUR Eurozone Flash Services PMI

09:00 EUR Eurozone Flash Manufacturing PMI

09:30 GBP UK Flash Services PMI

09:30 GBP UK Flash Manufacturing PMI

13:45 USD US Flash Manufacturing PMI

Wednesday, 25th March

09:00 EUR German Final IFO Business Climate

09:30 GBP UK CPI

12:30 USD Core Durable Goods Orders

Thursday, 26th March

9|:30 GBP Retails Sales

12:00 GBP MPC Official Bank Rate Votes

12:00 GBP Monetary Policy Summary

12:00 GBP Official Bank Rate

12:30 USD Final GDP

Friday, 27th March

12:30 USD Core PCE

12:30 USD Personal Spending

12:30 USD Personal income

14:00 USD University Of Michigan

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