For weeks, the market has worried coronavirus would hammer the economy. Tomorrow may bring the first real confirmation of that fear.
The U.S. Labor Department is scheduled to report weekly jobless claims at 8:30 a.m. ET on Thursday. Of all the regular data points, claims are the most up-to-date. (They track the number of people applying for unemployment insurance across the country.)
Tomorrow’s numbers will cover the week ended Saturday, March 7. It’s one of the first periods that awareness of the illness became widespread in the U.S. For example, it was immediately after Covid-19 triggered the S&P 500’s biggest drop since 2008. It was also the same week that the Federal Reserve issued an emergency interest-rate cut.
Most economic data was strengthening as the illness began to spread. For instance, February’s non-farm payrolls and several industrial reports beat estimates.
Railroads, Junk Bonds
Other, faster-moving, numbers have been more bearish. Train traffic, announced weekly by the Association of American Railroads, has collapsed to its slowest pace in at least four years.
Junk bonds have also experienced one of their worst routs ever. The BofA High-Yield Index, which goes up when prices go down, flew from 3.56 percentage points on February 14 to 6.68 percentage points last Monday. The last time it increased that quickly was the 2008 financial crisis.
Despite these short-term indicators weakening sharply, most economists haven’t yet adjusted their estimates on initial jobless claims. Consensus numbers show most expecting between 215,000 and 218,000 tomorrow morning. That’s pretty much inline with earlier reports.
In conclusion, the market is anxious about travel restrictions punishing the economy. Hard numbers may start confirming those worries soon.