Terrible NFP but next month will be worse

Morning all, I hope you are keeping well. After a terrible NFP print on Friday, the markets have bounced this morning. We saw a -700k job print which looks horrendous (I believe that’s one of only a handful of negative prints in the last 10 years), but that number is still not considering the wider impact of the virus, so I imagine that the next print will be even worse.

Terrible NFP numbers – What To Watch

As for data, watch out for the Sentix investor confidence print today, but otherwise focus is on the Eurogroup meeting tomorrow where ‘corona bonds’ and other policy options are expected to be discussed. Later this week, Fed and ECB minutes are due for release.

I can not imagine that the contents will make for significant reading. US initial jobless claims will be closely monitored on Thursday, so keep an eye on that.

COVID-19 & Oil

This week’s focus continues to be on the covid-19 developments, despite the terrible NFP numbers, where the number of infections and deaths continues to rise significantly, especially in the US. Meanwhile, the growth rate in new infections and deaths is coming down in Europe, suggesting that the lockdown measures are beginning to have the desired effect and perhaps contamination has peaked. It also seems that the epicentre has moved to Spain from Italy.

The global epicentre of the coronavirus has moved to the US, which is by far the most affected country. US President Trump said that if under 100,000 people died on the back of the virus, it would be considered a good job. And the war on oil continues, but OPEC+ is tentatively scheduled to meet on Thursday, so look for headlines before then.

RECOVERY or Trap?

The Dax seems to have started a recovery attempt again. A decline in the new Covid-19 victim numbers in some major European countries is easing the equity market somewhat. These provide conditions for aggressive bulls to jump on the discounted prices. The question is whether or not we have one more flush to see in the market. Have we reached a bottom, or is this a trap?

Covid-19 is a medical issue, so for me, until we see clues that the pandemic is under control or the risk is to be downgraded or the number of cases continues to slow, we’re not finished yet. Lest we forget that any bullish momentum may prove short-lived as we have a looming recession to content with.

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