More turbulence to come as some US states prepare to reopen their economies and global trade tensions rise

More turbulence to come as some US states prepare to reopen their economies and global trade tensions rise

Posted on Sunday, May 17 2020 at 2:07 pm GMT+0000

Risk sentiments weakened last week weighed by worries about Sino-U.S. trade relations and weaker-than-expected U.S. Economic data painted a grim picture at the end of the past week as U.S. retail sales and manufacturing output showed record declines in April due to virus-related stay-at-home orders. Retail sales plummeted by 16.4%, a decline never seen before in the history of the series.

The data came after U.S. President Donald Trump ratcheted up trade tensions with China. Speaking to Fox Business Network on Thursday, Trump cast doubt on future trade links with China, saying the recently signed phase one deal “doesn’t feel the same to me”, before adding “right now I don’t want to speak to him” about President Xi. The US president went even as far as saying “We could cut off the whole relationship”.

More turbulence in the US markets are expected this week as some US states prepare to reopen their economies and global trade tensions rise. Markets participants will be watching states trying to reopen their economies without fueling a resurgence in coronavirus cases. Europe is also gingerly trying to get back to business, with restrictions loosening across the continent as the spread of the coronavirus slows, with most countries started executing reopening plans. Optimism that easing coronavirus restrictions would boost activity this month, can boost risk sentiments.

And at the time at which China seems to become the main battleground in the 2020 presidential race, investors will watch any comments by the President Trump closely.

On the data front, this week seems relatively quiet, with the preliminary PMIs for April in the UK, US, and Eurozone being able to reveal the pandemic’s impact on businesses. US initial jobless claims due on Thursday is expected to attract attention as it used to do ever since the beginning of the virus outbreak. And before that, on Wednesday the Fed will release the minutes of its latest meeting, where policymakers are expected to reiterate they stand ready to act again, specially after the Chairman Powell noted in a speech last week that economic recovery will take time even after reopening.


In brief, this weeks’ economic highlights:

Tuesday, May 19, 2020:

  • RBA Meeting Minutes (01:30 GMT)
  • UK Average Earnings Index +Bonus (Mar) (06:00 GMT)
  • UK Claimant Count Change (Apr) (06:00 GMT)
  • German ZEW Economic Sentiment (May) (09:00 GMT)
  • US Building Permits (Apr) (12:30 GMT)

Wednesday, May 20, 2020:

  • PBoC Loan Prime Rate (01:30 GMT)
  • UK CPI (YoY) (Apr) (06:00 GMT)
  • EU CPI (YoY) (Apr) (09:00 GMT)
  • Canada Core CPI (MoM) (Apr) (12:30 GMT)
  • Crude Oil Inventories ((14:30 GMT)
  • FOMC Meeting Minutes (18:00 GMT)

Thursday, May 21, 2020:

  • UK Composite PMI (09:30 GMT)
  • UK Manufacturing PMI (09:30 GMT)
  • UK Services PMI (09:30 GMT)
  • US Initial Jobless Claims (12:30 GMT)
  • US Philadelphia Fed Manufacturing Index (May) (12:30 GMT)
  • US Flash Manufacturing PMI (13:45 GMT)
  • US Existing Home Sales (Apr) (14:00 GMT)

Friday, May 22, 2020:

  • UK Retail Sales (MoM) (Apr) (06:00 GMT)
  • French Flash Services PMI (07:15 GMT)
  • French Flash Manufacturing PMI (07:15 GMT)
  • German Flash Manufacturing PMI (07:30 GMT)
  • German Flash Services PMI(07:30 GMT)
  • EU Flash Manufacturing PMI (08:00 GMT)
  • EU Flash Services PMI (08:00 GMT)
  • Canada Core Retail Sales (MoM) (Mar) (12:30 GMT)