We begin today with a bit of yesterday’s news. The much anticipated initial jobless claims report from the United States showed that 1.5 million people lost their jobs over the past week, which was in line with the forecast.
Though this number is still high, it’s nowhere near as alarming at the 6 million jobs lost in the first couple of weeks of the pandemic. The report indicates that the US labor market is slowly but surely stabilizing. Nevertheless, continuing jobless claims were still close to 21 million against the 20 million investors hoped for, so there is still a long way to go.
Later today we expect the Michigan consumer sentiment report, which will offer a further indication of how the US economy is doing. The markets deflated earlier this week after the Federal Reserve revealed its grim expectations of a prolonged crisis and low inflation rates for the foreseeable future.
However, today we see the stock markets in the US rebounding, despite the series of negative forecasts made this week. There was an earlier scare about a second wave of the pandemic already at hand in the United States, but it seems that the stock market overreacted with quick losses, so now it’s bouncing back in a corrective manner.
Meanwhile, the bad economic news has spread to the United Kingdom, where preliminary calculations show that the GDP dropped by 25% in the last couple of months due to the lockdowns that the country went through.
The biggest economies in Europe, though also seeing losses in growth and output, are still doing better than the UK, which is raising further questions about Brexit, especially if the UK leaves without a trade agreement.
Prime Minister Boris Johnson has until the end of the current month to decide whether to extend the transition period. Considering the lack of progress in trade negotiations thus far in 2020 and the fact that the pandemic was not accounted for in the PM’s original plans, many hope that he would change his mind and agree to an extension.
