Moderna announced positive results for its trial of a coronavirus vaccine and investors hope this would help the economy recovery.
This comes after a turbulent week, against a backdrop of Sino-American trade rivalries, and rather pessimistic predictions from the Fed, although Jerome Powell told CBS yesterday that nobody knows for sure what will happen and how economies will recover.
In the meantime, the Fed is doing what it thinks is best with the weapons at its disposal. Powell still has a preferred scenario, which involves a slow recovery. He even believes that to return to a cruising speed, it may take the arrival of a vaccine, probably in 2021, since it is not enough to snap a finger to find one and produce it. More speculation.
More concretely, but without more certainty, trade talks between China and the United States are expected to resume this week. The US has taken another step in the trade war, announcing last week new restrictive measures on access to US semiconductors, but China does not want to stop there. The Chinese Commerce Ministry issued a statement urging the United States to stop these practices, which it called "a violation of market principles" and "disregard for basic rules of international trade". It also said China would take "all necessary measures to safeguard the legitimate rights and interests of Chinese enterprises".
In China, some encouraging statistics were published on Friday. In particular, retail sales gradually recovered to -7.5% (annual) from -15.8% in March, unemployment stabilized at 6%, and FDI increased slightly. But in the U.S,, there was a 16.4% drop in retail sales (monthly) and a 17.2% drop for the "core" version excluding the auto sector. Industrial production, for its part, although better than expected, continues to deteriorate, at -11.2% (monthly), against -4.5% the previous month. Meanwhile, the JOLTS index (which records new job openings over 1 month, excluding the agricultural sector) reported only 6.19 million new jobs.
For the Euro Zone, the statistics came as no surprise for March, with a 0.2% drop in employment, a GDP of -3.8% and a trade balance of EUR 28.2 billion.
Today on the agenda, we have the NAHB index of the U.S. housing market, released at 4:00 p.m., will be the only relatively important indicator today. Early this morning, Japan announced that its preliminary GDP contracted by -0.9% in the first quarter (-1.1% by consensus).