Market volatility ensued through last week as fiscal stimulus measures were announced across the globe, including in China. Overnight we heard that the PBoC sliced interest rates on bank loans by the largest amount since 2015. Equities broadly benefitted from fiscal measure announcements through last week and the yield on the US Treasury rallied to 0.68%. As more countries locked down, the US announced extending its social distancing policy until the end of April, while reports suggested the UK could maintain the current status quo for six months.
Data releases last week, for February, were largely ignored as the true impact of coronavirus will start to filter through in April, as March readings are published. The official China PMI prints are due early tomorrow morning, having plummeted to 35.7 in February, the manufacturing reading is expected to bounce to 44.8 for March, according to Bloomberg. On Tuesday we’ll have the MNI Chicago PMI print for March, expected at 40. A busy day on Wednesday will see the ADP release, which is expected to have fallen by 150k, and the US PMI and ISM readings; US ISM manufacturing is expected to have fallen into contractionary territory (as widely expected), to 45, according to Bloomberg. US factory orders and durable good readings out on Thursday may give further clues as to the US’ economic performance in March, and Friday’s non-farm will be watched closely, having been completely ignored earlier this month as the coronavirus crisis had barely reached the West.
As policymakers across the world attempt to counter the impact of coronavirus, any and all announcements will be monitored closely by markets this week; expect further market volatility. Euroarea finance ministers are due to speak this week to determine details on the ESM rescue facility; there are concerns that the EU is not doing enough to counter the potential economic impact versus the likes of the US’ extraordinary stimulus. Oil will also be monitored very closely as Brent has hit 17-year lows following demand concerns. Moreover, the OPEC+ agreement comes to an end on April 1st. Russia has reportedly asked that a new and expanded deal be discussed so as to stabilise oil prices. Incidentally it looks as though all parties would like an alliance with Saudi Arabia following reports that the US would like to join forces with Riyadh, which could see Saudi exiting OPEC.