This is the most important U.S. data this week

Macro

Christopher Dembik

Head of Macro Analysis

Summary:  Today at 12:30 GMT, weekly U.S. jobless claims data will be released for the week ending March 21. It is the most important U.S. statistics this week as it will give an early indication of how much the COVID-19 outbreak is damaging the economy and the job market.


Estimates of jobless claims range from around 1 million to 4 million for the previous week, which has never been seen in modern history.

Comment

U.S. jobless claims will be one of the most important macroeconomic market movers this week. It will give us an early indication of how much the COVID-19 outbreak is hurting the economy and the labor market as it will refer to the first week when social distancing and lockdown measures have been implemented. Many states have already reported a sharp increase in layoffs, especially in the service sector (notably in the food and accommodation industries). The wide range of estimates, from around 1 million to 4 million, show that we lack historical references to really understand the impact of this unique and probably massive crisis hitting the economy. The previous record was just a little under 700,000 in 1982 when the United States was going through the recession caused by the Fed’s contractionary monetary policy. In less than two weeks, we have moved from full employment to a number of job destruction we have never experienced in a period of peace.

What is even worse is that today’s figure might misrepresent the real scale of jobless claims. An undefined number of claims went unreported as states’ unemployment insurance program offices were overwhelmed by the massive number of applications both by phone and online. Some states even informed that their phone lines was saturated and their website crashed due to high demand, possibly pushing some claims into next week. In other words, the worse is yet to come for the labor market.

Following St. Louis Fed chief James Bullard and Treasury Secretary Steven Mnuchin warnings, we already know that unemployment is doomed to skyrocket in the coming months, and could reach a double-digit figure around 20% or even 30%. It means that the flow of bad news is just starting, and that tens of millions of layoffs are about to be reported. Any number in the low range estimate (around 1 million) could be a good surprise (I would have never expected to write that in my lifetime!) and be a relief for the stock market. On the contrary, any number in the high range estimate will left investors utterly shocked and will contribute to reinforce risk aversion in the equity market.

Disclaimer

The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-sg/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.