China’s approval of Hong Kong security legislation has increased tensions with the U.S. – President Trump said his administration is “not happy” with Beijing. Stocks are lower this morning.
- The US economy shrank by an annualized 5% in the first quarter of 2020, more than an advance estimate of a 4.8% contraction and ending the longest period of expansion in the country’s history, the second estimate showed. It is the biggest drop in GDP since the last quarter of 2008 as the Covid-19 pandemic forced several states to impose lockdown measures in mid-March, throwing millions of people out of work. Private inventory investment was revised downwards while personal consumption and business investment shrank less than anticipated. In the second quarter of the year, the economy is seen contracting as much as 40%, which would be the biggest plunge ever as the “stay-at-home” orders issued in March extended through the quarter, with businesses and schools switching to remote work or canceling operations, and consumers canceling, restricting, or redirecting their spending.
- The number of Americans filling for unemployment benefits eased to 2.123 million in the week ended May 23rd, the lowest level since the coronavirus crisis began more than two months ago. Still, filings came in slightly above market expectations of 2.1 million and lifted the total reported since March 21st to 40.7 million. On a non-seasonally adjusted basis, the biggest increases in jobless claims were recorded in Virginia, Pennsylvania and Kentucky while the largest decreases were reported in Washington, Florida, California and New York. The 4-week moving average, which removes week-to-week volatility, eased for the fifth straight week to 2.608 million. Meanwhile, continuing jobless claims decreased by 3,860 to 21 million in the week ended May 16th from a record 24.9 million in the week ended May 9th. Figures beat market forecasts of 25.8 million and showed the first decrease in continuing claims since the coronavirus pandemic started in March.
- Annual inflation rate in Germany is expected to slow to 0.6% in May of 2020 from 0.9% in the previous month, matching market expectations, preliminary estimates showed. It is the lowest inflation rate since September of 2016, due to an 8.5% drop in energy costs (-5.8% in April) while food inflation slowed (4.5% vs 4.8%). On the other hand, inflation was flat for both services (1.3%) and rents (1.4%). On a monthly basis, consumer prices decreased 0.1%. The harmonized index is seen rising 0.5% on the year and being unchanged on the month.
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