After U.S. President Donald Trump reported that America is currently facing the worst period in the last two weeks of the Coronavirus pandemic, when economic reports begin to show the real impact of quarantine on the economy, investors are preparing for a worst-case scenario. The main focus will be on the American labor market, as an initial report on the number of applications for unemployment benefits is expected to be published on Thursday this week. Also, the minutes of the Fed's meetings on Wednesday may give some optimism, as investors expect certain actions and ideas from the regulator, and how they will get out of this situation.
The most important news of this week:
U.S. President prepares the population for a large number of lethal outcomes. Donald Trump has warned the citizens that they need to prepare for a large outbreak of fatalities from COVID-19 in the coming days. The U.S. has the largest number of infections in the world today. Reuters estimates that more than 306,000 Americans have been diagnosed with the virus and more than 8,300 have died. White House medical experts predict 100 to 240,000 deaths during the pandemic.
Unemployment benefit claims are expected to soar. Initial jobless claims are expected to be published on Thursday and will be the main engine for markets this week. Over the past two weeks, the number of applications rose to record levels as a result of restrictive measures to contain the infection. As a result, companies are suspended for an indefinite period of time and dismiss their employees. Analysts predict that about 5 million initial applications will be filed this week.
The minutes of the Fed meeting. Federal Reserve will publish the minutes of the meeting on Wednesday. Investors expect that it will give an idea about the urgent reduction of interest rates and the injection of additional stimulus measures into the economy. Fed head Jerome Powell and US President Donald Trump made 4 phone calls on February 7 and February 26. What they discussed was not immediately clear, but on February 28, Powell said that he recognized the risk associated with COVID-19 and promised that the U.S. Central Bank would support the country's economy.
EU will discuss debt bonds. Officials of the EU Finance Ministry will hold consultations this week on how to help developing countries suffering from coronavirus. A decision that will satisfy everyone will not be reached by the deadline of April 9. There are now differences of opinion - Germany and the Netherlands are opposed to the proposals for joint "coronavirus", which are voted for by France, Italy, and Spain. An issue of common bonds would assure poor countries and investors that they are backed by successful bloc members who are holding back borrowing costs. But now, more pleasing options would include credit lines from the EU bailout fund, more European Investment Bank loans, and the use of a joint long-term budget directly or to guarantee loans. Germany is likely to avoid a joint bond issue this time.