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Re-opening the UK economy

It is generally agreed that economies will be much harder to re-open than they were to close. The UK PM on Sunday evening set out his plan to re-open the UK economy but this plan is still to be fleshed out.

Boris Johnson, throughout lockdown, has been very liberal in his approach trusting the people of the UK to do the ‘right thing’ – and by-and-large they did. But businesses and employees now deserve much clearer and far more precise instruction, the clarity is missing.

Second virus wave

Fears of second virus waves in South Korea, Germany and even China highlight the concern about re-opening too soon. It should be a concern for the UK too. We’ll see…

U.S.

U.S. indices are close to the top of their recent trading ranges. The Nasdaq closed the week up. The S&P 500 is less than 10% off its high after rallying even more and the FTSE 100 and other European indices made up some ground last week too. All this recovery came against the backdrop of the coronavirus and of business and economic uncertainty. Is it too fast too soon?

It’s highly likely U.S. data will deteriorate some more as the analysis starts to reflect the worst of the coronavirus damage. April’s non-farm payroll on Friday , for instance, showed 20.5 million workers had lost their jobs and the unemployment reached a record at 14%. The month of May will likely prove even worse.

Asia

Most Asian markets pushed a little higher. The FTSE 100 flirted with 6000 in early trade today (Monday 11th May 2020), since dropping back to 5900. China’s central bank has signalled more measures.

Backward looking data will be largely, but not entirely, ignored by markets as the focus is on the speed of exiting lockdown and of future Fed and government assistance.

Central banks to speak

Central bank speakers will be in focus again this week, with Fed chair Powell to speak on Wednesday 13th and the Bank of England’s new governor Andrew Bailey due to speak on Thursday 14th.

German constitutional court ruling on the ECB’s bond buying programme rumbles on.

Market moving news coming up to look our for…

Overnight Tuesday 12th – China consumer price index data due.

U.S. consumer price index data on Tuesday 12th.

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