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Top 5 Things to Know in the Market on Thursday, June 18th

Published 06/18/2020, 06:27 AM
Updated 06/18/2020, 06:35 AM
© Reuters.

© Reuters.

By Geoffrey Smith 

Investing.com -- Initial jobless claims are set to slow further from their eye-watering pandemic peak, while continuing claims are expected to dip below 20 million for the first time since April. The ECB gets a vote of confidence from banks as they take advantage of its cheapest-ever loan, while the Bank of England is expected to increase its bond-buying program later. Stocks are set to open mixed amid concerns over a new wave of virus infections and the threat of trade tension with the EU, while President Trump called John Bolton a liar after the former National Security Advisor depicted him as a re-election-obsessed supplicant to Xi Jinping. Here's what you need to know in financial markets on Thursday, June 18th.

1. Jobless claims set to continue falling

The latest weekly set of jobless claims is set to be published at 8:30 AM ET (1230 GMT), at a time when a rise in new Covid-19 infections is raising fears of another wave of job-killing lockdown measures.

Analysts expect initial claims to fall to 1.30 million last week, which would be the lowest since the first lockdowns started to bite in late March, and down from 1.54 million the previous week. Continuing claims, which indirectly reflect the speed at which people are being rehired, are expected to dip below 20 million for the first time since April, at 19.80 million.

The numbers will be released simultaneously with the Philadelphia Fed’s regional business survey. The New York Fed’s Empire State survey earlier this week showed a stronger-than-expected rebound in manufacturing activity.

2. Banks vindicate ECB's rate cut with biggest-ever liquidity operation

The European Central Bank carried out its biggest ever single injection of liquidity into the eurozone’s money markets, in an apparent vindication of its move to push interest rates still further into negative territory last month.

Banks borrowed 1.308 trillion ($1.47 trillion) from the ECB’s latest Targeted Long-Term Refinancing Operation, or TLTRO, the first to offer a rate as low as -1% for banks that meet the ECB’s lending criteria (which means nearly all of them).  After netting out money that is being shifted from other outstanding ECB loans this week, it still adds up to a liquidity injection of 548 billion euros.  

The high demand implies that the lower rate isn’t as destructive as some had feared with regard to bank profitability. Pictet Wealth Management economist Frederik Ducrozet said it will result in a net transfer of 15 billion euros to the participating banks. The euro was little changed at $1.1248, while sovereign bond spreads tightened modestly.

3. Stocks set to open mixed

U.S. stocks are set to open mixed, as concerns about the coronavirus and an increase in political noise undermine confidence in a V-shaped economic recovery.

By 6:30 AM ET (1030 GMT), the Dow Jones 30 futures contract was down 31 points, or 0.1%, while the S&P 500 futures contract was down 0.1% and the Nasdaq 100 futures contract was up less than 0.1%.

Stocks in focus on Thursday will include T-Mobile, which predicted a healthy rise in customers this year after the closing bell on Wednesday. That should offset concerns about higher-than-expected one-off costs from its merger with Sprint, and a bigger-than-expected hit from Covid-19 related provisions.

Big tech will also be in focus after the U.S. effectively pulled out of international talks on a new framework for taxing multinational companies. That makes the imposition of digital services taxes in key markets in Europe likelier – as well as a U.S. response in the form of fresh import tariffs.

4. Bank of England expected to increase QE

The Bank of England is expected to ramp up its monetary support for the U.K. economy at its Monetary Policy Committee meeting.

Analysts expect the BoE to increase its asset purchase program by at least another 100 billion pounds, given that the current pace of bond-buying will exhaust it by September.

The Organization for Economic Cooperation and Development warned last week that the U.K. economy will shrink by the most of any in the G7 this year due to the Covid-19 pandemic. The country was slow to impose lockdown and social distancing requirements and its economy has a disproportionately high exposure to services, which have suffered more than manufacturing in the downturn.

The pound drifted down 0.6% to a two-week low against the dollar at $1.2485, and also slid to its lowest against the euro since late March.

Elsewhere, the Swiss and Norwegian central banks kept their key rates unchanged, while Indonesia's cut again.

5. Trump brands Bolton a liar after claims of weakness in front of Xi

Former National Security Advisor John Bolton denounced President Donald Trump in widely-trailed excerpt from his soon-to-be-published memoir.

Bolton said Trump had sought the help of President Xi Jinping in getting re-elected in 2020 by engineering a trade deal that he could present as a triumph, and had repeatedly made concessions to Xi despite long-standing U.S. concerns about Chinese intellectual property theft, currency manipulation and human rights observations (Bolton noted on the latter that Trump privately endorsed the establishment of concentration camps for China’s Muslim minority in its western Xinjiang province).

Trump, whose first two years in office were overshadowed by evidence of his soliciting Russian help in the 2016 election campaign, responded by calling Bolton a liar.

Bolton also criticised the Democratic Party for not broadening its efforts to have Trump impeached for abuse of office. Bolton declined to testify at the impeachment hearings last year, preferring to save his revelations for his publishers.

Latest comments

lol. there was zero evidence after 2 years of the most extensive investigation in human history of any collusion by trumpnor his team and 2 years later thisbwriyer still can't say it out loud. Bolton claims were proven false, again over the course of the most ridiculous imoeachment trial in the history of the US. i can't stop laughing. I cant even trust the economic news anymore. lol
yeah right, a bunch of supporters who have gain nothing
"Trump, whose first two years in office were overshadowed by evidence of his soliciting Russian help in the 2016 election campaign . . ." I couldn't let this go. Have you been sleeping for the past several months after exoneration of any accusations? Did you not read the formerly classified documents released by acting NIA Rich Grenell? Are you not paying attention to AG Barr and Durham's ongoing investigation?  Pro tip: If you're going to allow politics to slip into your pre-open market analysis, expect to lose subscribers. Bye bye.
I said the same thing. first of all, what does any of that have to do with economic news. after 2 years of the most expensive investigation and thorough, in human history, and a sham of an impeachment trial, but that again was the most extensive and ever changing, and chasing trial in history only to end up vindicated and have want to be writers still try to push the narrative that's been proven a lie time and time again.
Market will go Red-Green-red today. Looks like another fun one!
The pump will probably come before the dump - if the big boys haven't let the market drop yet, it will probably shoot upwards to get everyone on board and when the headlines says everything is working out fine, lets watch them tank this thing into oblivion.
Absolutely will happen!
Trump, The Lying King, the man of 17000 lies and counting, calls others liars with a straight face. Gotta love it!
King of lie
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please jobless claim under 1000k
yeah right. a bunch of supporters who have gained nothing $$$ . but letting out their racism finally
... or he didnt testify because he wpuld have commited perjury.
would*
na...it's better to get paid telling his story without be being questioned.
Expected - just like retail sales were Expected to be ALOT lower - just write the freaking news we don't need your opinion
Beijing outbreak under control according to Chinese health authorities. This.
That for hire sign in the picture is the epitome of the low wage recovery this past decade
Bolton is a liar for sure, he admitted. https://thefederalist.com/2020/01/29/in-2010-fox-interview-john-bolton-confessed-he-would-absolutely-lie-about-national-security-matters/
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