It’s easier to ask for forgiveness than to manage expectations

Market Update: 3 April 2020

US Initial jobless claims reflected that mantra overnight with a whopping 6.6m claims (vs a survey of 3.7m) – double that of the prior week, the markets were pretty quick to forgive this with S&P closing up 2.3% as we head into the unknown of Non-Farm Payrolls tonight (survey of -100k sounds optimistic).

Of course it wasn’t claims that caused the rally, it was the perversity of Trump getting Russia and the Saudis to agree on cutting Oil supply causing a 25% spike higher, to settle to +15%. One would think they have no choice but to reduce supply anyway as demand wanes – not commuting to work or jumping on a plane does that.

8 weeks ago we were “lucky” to have only 15,000 cases – today we broke 1,000,000. So if we’re becoming immune to sticker shock – as that’s what happens when you close businesses, will markets become immune to how COVID-19 spreads in the next 8 weeks?.

If the global psyche is supported by the notion that we’re all suffering – so we don’t take it personally, the next question becomes for how long must we endure? This is surely the next phase of what markets will look to anticipate. A reduction in daily cases gives some light at the end of the tunnel, as does recovery rates – but it might mean less if commerce is still closed.

AUD feels a bit heavy.. USD does gain on Oil moves, but as well, markets don’t like things that don’t move… so if it failed above 62c, 59 might be an option.

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