Yesterday the United States surprised the markets positively with a higher than expected durable goods report and lower than predicted continuing jobless claims. However, the initial jobless claims increased. Moreover, the US labor market is expected to take a new heavy blow as several states are currently experiencing massive coronavirus outbreaks and will have to keep the existing lockdowns in place or reintroduce them fully in order to contain the spread of the virus.
The Covid-19 situation remains alarming globally. Both the United States and Brazil reported 40,000 new coronavirus cases yesterday, while India reported 18,000. The virus is spreading fast throughout Latin America, with Mexico, Chile, Peru, and Colombia seeing infections rise in the thousands each day.
The total number of coronavirus cases around the globe has surpassed 9.7 million, of which 2.5 million are in the United States, and 1.2 million in Brazil.
In the US, the Federal Reserve is tightening restrictions on private banks as it warned that the coronavirus outbreak could cost them another $700 billion in losses. The banks passed the Fed’s most recent stress test but the central bank is recommending that they stay financially conservative over the next few months as the US economy deals with the pandemic.
The markets today are suffering due to a series of mixed signals. Though earlier this week indices are dropping in value due to the resurgence of the coronavirus, now the White House is trying to calm them by saying there will be no more lockdowns. Thus, today we are seeing a modest recovery but it might not last.
In Europe, the message is more convincing. The European Central Bank showed that their most recent stimulus measures proved effective in stimulating local banks. Moreover, ECB President Christine Lagarde stated that there is no immediate danger for the economy, as Europe is recovering from the pandemic well, without signals of a second wave of infections.
Later today we expected several PCE price index reports from the United States and the Michigan consumer sentiment which will further show what the current state of the economy is like.
