Jobless claims due, Trump refuses to commit to a peaceful transfer of power, and more virus restrictions reimposed.
Today’s initial jobless claims number is expected to come in at 840,000, a number that would not represent a significant improvement on recent data. Continuing claims are forecast to drop to 12.3 million. The data comes as policy maker warnings increase on the pace of the recovery from the pandemic shutdown, with Fed Chair Jerome Powell saying the path ahead for employment remains uncertain. Treasury Secretary Steven Mnuchin will join Powell in the Senate today for testimony.
President Donald Trump refused to commit to a peaceful transfer of power if a tally of ballots show Democrat Joe Biden is victorious in November. The president has criticized the legitimacy of mail-in voting, and yesterday made the point that it was important to have the new Supreme Court justice confirmed before the election as the result “will be before the United States Supreme Court and I think having a 4-4 situation is not a good situation.” Market analysts are already warning about higher volatility around November 3, with fears of a drawn-out process feeding expectations of increased uncertainty to the end of the year.
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Investor worries about a second wave of virus lockdowns are starting to come true, with Israel the latest country to reintroduce restrictions as it battles a resurgence of infections. In the U.K., the government canceled plans for a budget this year, with Chancellor of the Exchequer Rishi Sunak set to outline plans for short-term economic support later today. President Trump signaled he may veto any tightening of U.S. rules on the emergency clearance of a vaccine, saying it “sounds like a political move.” Global deaths from the disease are approaching 1 million, according to data from Johns Hopkins University.
Yesterday’s afternoon slump in the S&P 500 Index pushed the gauge close to a correction as investors heed warnings from a range of Fed speakers on the need for further stimulus. That slump is weighing on global equities today, with the MSCI Asia Pacific Index dropping 1.7% overnight, while Japan’s Topix index closed 1.1% lower. In Europe, the Stoxx 600 Index slipped 0.8% by 5:50 a.m., with improving German business optimism and a strong take-up of the latest European Central Bank liquidity operation providing some relief. S&P 500 futures shifted between gains and losses, the 10-year Treasury yield was at 0.664% and gold dropped.
There is another cacophony of Fed speakers today all addressing various events, with Dallas Fed President Robert Kaplan, St. Louis Fed President James Bullard, Chicago Fed President Charles Evans, Richmond Fed President Thomas Barkin (twice), New York Fed President John Williams and Atlanta Fed President Raphael Bostic. New home sales data for August is at 10:00 a.m. Costco Wholesale Corp., Accenture Plc and Blackberry Ltd. are among the companies reporting results.