Joblessclaims,Trump'sconferenceandEquinefate

It was Thursday yesterday and the day of the US Jobless claims number announcement. The previous week’s claims number was 2.1 million. The figure takes the nine week total to 40.7 million. To put the number in context, roughly 37 million people filed unemployment insurance claims during the year and a half of the great depression. The numbers are expected to decline as the economy starts reopening but the moot question would be that how many will be able to go back to their previous positions with the same earning capacity.

Economists generally try to delineate between issues by terming them as seasonal or structural. Seasonal problems are expected to resolve as the temporary conditions change, and there is a sort of mean reversion in play. For example, the demand for a particular item might depend on the ever changing fashion sense of the public and the production worker might be in and out of a job, exposed to vagaries of tastes.  But the inflection point when the seasonal becomes structural is hard to decipher. The horse population in the US hit a peak around 1915 when it was close to 20 million, as the structural shift from horse carriage to cars started thanks to the famous Ford Model T. The equine population declined to 4.5 million by 1960. The 15 million equines were probably not able to reskill themselves!

In important news lined up for Friday is the press conference held by US President Trump on the issue of China. “We will be announcing tomorrow what we are doing with respect to China”, he told reporters without divulging any further details. The escalation comes following the approval of Chinese parliament of a security legislation regarding Hong Kong. US stocks closed lower post Trump’s comment. PBOC on the other hand has set the yuan reference rate at 7.1316/$ vs 7.1277/$.  

Apart from Trump’s conference, Fed Chief Jerome Powell will also speak to reporters today which will be of interest as the market would like to know about the next tool in the Fed’s tool kit. NIRP remains the main discussion point. 

Domestically, Indian equities trade slightly negative in line with the stock sentiments across the world. The 10 year benchmark bond trades at 5.98 against the previous close of 5.99. The 84 day 80k Cr INR CMBs were auctioned at 3.29% as per the market expectation, and there is a 30k INR auction lined up for today. On the FPIs flow side the month of May has seen net outflow of approx. 7000 Cr INR with outflow of 19k Cr INR from debt being compensated by 12k Cr INR inflow in equities. The Indian rupee currently trades at 75.65.