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Weekly Market Digest – March 30 to April 3, 2020

Don Curren April 3, 2020

The global war between a primitive, parasitic microorganism with a penchant for spreading quickly and furtively and a technologically advanced species at the other end of the evolutionary scale continued to rage this week. The odds are strongly in favor of the latter eventually prevailing, but it’s been on the retreat over the last few weeks, and things seem likely to remain grim for at least a few more.

Widening recognition of the severity of the crisis and the necessity of going on a war footing was confirmed when US President Donald Trump said his nation was in for a “very painful two weeks” and even the state of Florida imposed wide-ranging restrictions on the movements of it citizens. The world passed a significant milestone – 1 million COVID-19 infections globally, and the US increased its lead over Spain as the nation with the most confirmed infections. Scenes of field hospital construction in Central Park and the Navy hospital ship Comfort steaming into New York City’s harbor looked like something from a dystopia movie.

Economic data for the US deteriorated even more quickly than economists expected this week. Initial jobless claims data indicated claims surged by 6.6 million in the previous week, far surpassing consensus expectations, and March nonfarm payroll data for the US revealed that 701,000 jobs were lost while economists had expected around 100,000.

Governments in the advanced economies continued to tweak (ie expand) their massive fiscal support measures. The week was relatively quiet on the central bank front as policymakers regrouped after the extraordinary measures of the preceding weeks, although the Federal Reserve launched its temporary FIMA US-dollar Repo Facility to help support the smooth functioning of financial markets in other jurisdictions and thereby expand its de facto role as the global lender of last resort.

Now that economic data are capturing the full impact of the pandemic and the measures to reduce its impact on economies around the world, they will likely continue to be a focal point for financial markets. That said, it’s a relatively light week for data, with Canada’s jobs data for March scheduled for release Thursday – likely to be something of an anticlimax after the US nonfarm payrolls report this Friday – and US consumer price inflation scheduled for Friday, April 12, a day when markets in Canada and many other jurisdictions celebrate Good Friday. Lower profile releases include the Bank of Canada’s Quarterly Business Outlook Survey on Monday, US consumer credit data on Tuesday and the preliminary University of Michigan consumer survey data for April on Thursday.

Crude Awakening: Join us Monday, for the next webinar in our COVID-19 series!

With the coronavirus crushing global oil demand and an ongoing price war flooding markets with excess supply, prices have crashed to multi-decade lows, with some having fallen into negative territory. Join our conversation on the impact on major oil producing and consuming countries, and what this means for currency markets.


Suggested Reading   |   Cambridge Market Analysis


■ US Services Data Suggest Some Resilience in March read article
■ US Payrolls Fall 701,000, Smashing Forecasts  read article
■ Oil Prices Skyrocket on Purported Saudi-Russia Pact  read article
■ US Weekly Jobless Claims Double, Shattering Last Week’s Recor  read article
■ ISM Manufacturing Data Beats Expectations, but Lands in Contractionary Territory  read article
■ US Consumer Sentiment Slumps, Fed Launches US Dollar Repos For Foreign Markets  read article

Suggested Reading   |   Counterparties

■ WSJ: Macy’s, Gap to Furlough Most Workers as Coronavirus Crisis Keeps Stores Closed  read article
■ Financial Times: Commercial paper market still creaking despite Fed measures  read article
■ New York Times: The Medical News Site That Saw the Coronavirus Coming Months Ago  read article
■ MarketWatch: Shutdown everywhere’ for at least 10 weeks? Bill Gates warns there’s ‘no middle ground’ in the coronavirus fight  read article
■ CBC: U.S. Amazon and Instacart workers strike to protest COVID-19 hazards on the job  read article
■ CD Howe Institute: Safeguard Critical Supply Chains by Addressing Weak Links: Crisis Working Group on Business Continuity and Trade  read article
■ Fortune: Goldman Sachs says its gloomy prediction of 24% U.S. GDP contraction in Q2 wasn’t nearly grim enough read article
■ New York Times: Ellis Marsalis Jr., Jazz Pianist and Music Family Patriarch, Dies at 85  read article
■ Project Syndicate: The Politics of the Pandemic  read article
■ Federal Reserve announces establishment of a temporary FIMA Repo Facility to help support the smooth functioning of financial markets  read article
■ Vanity Fair: “I Have No Ideology. My Ideology Is Health”  read article

Calendar for the Week of April 6

Monday, April 6
■ CAD – Bank of Canada Quarterly Business Outlook Survey

Tuesday, April 7
■ USD – February Consumer Credit

Wednesday, April 8
■ USD – Federal Reserve March policy meetings minutes released

Thursday, April 9

■ CNY – March New Yuan Loans
■ CAD – March Labor Force Survey Data
■ USD – University of Michigan Preliminary April Consumer Sentiment Data

Friday, April 10

■ USD – Consumer Price Index

Don Curren
Market Strategist and Content Editor