A day before the US unemployment report, Thursday provided extra fuel to what was already going to be a flame of huge proportions. Thursday saw the US jobless claims once again released. Last week’s numbers sent shock waves throughout markets as a record 3.3 million US residents claimed to be unemployed. However yesterday’s number completely blew this out of the water and set a new record in the process.
On Thursday 2nd April, the US jobless claims numbers were released, and to the surprise of many, the number came in at 6.6 million. If the number were to have been released a day earlier on April Fools day, many may have believed this to be t dark humour in the midst of one of the worst pandemics in recent history. However this number was no joke, a record 6.6 million people in the US, the largest economy in the world are now claiming unemployment due to the Coronavirus crisis.
This number came on the eve of Today’s Non-Farm Payroll, which many forecasted to be around -100,000 jobs. This new information may mean those forecasts are blown completely out of the water, creating potential panic in investor behaviour, should this be the case. However, this is relative, and to truly understand what this may mean, one must look back to years past. In doing so compare what we are seeing now, to previous points of turmoil in history, and only then may the significance of the current situation be appreciated.
From an historical perspective, this is without doubt and potentially excluding the great depression, the worst the US jobs market has been in modern history. The last notable crisis in the US was of course the 2008 financial crisis, and at its height, it was said between 500,000 – 750,000 jobs were lost. This would mean that the current crisis, Trump’s previous highs, no pun intended, by close to over 6 million. Essentially meaning 6 million more people are now unemployed due to the Coronavirus, than in 2008.
So with record unemployment, what does this mean for the markets, not only in the US but around the globe? Could there be a trend soon to follow where we see other countries experiencing similar economic situations as a result?
US related Markets
This week was an interesting one for US related markets, and how they traded. Crude Oil was up 24% on the news that, according to President Trump, that Saudi and Russia could be set to find an agreement in cutting the supply of Oil. According to the tweet, around 10 million barrels could be cut in daily production.
Separate to Crude, which is traded in USD, index markets also provide volatility as the jobs situation in the US worsens. However this week in general has seen markets essentially consolidate. Monday and Thursday saw the Dow Jones rise in value, by 3.2% and 2.2% respectively and Tuesday/Wednesday saw falls of 1.8% and 4.4%. Essentially this has seen markets consolidate. Could today’s NFP number be the deal breaker if this week turns to be bullish or bearish?