Market Matters
While the US is slowly starting to talk about plans on re-starting the economy from the social distancing restrictions, we saw more pieces of data that shows how much the economy has contracted. We did see an OPEC cut in oil production over last weekend of 9.7 mln barrels/day, although oil is still down, with WTI trading at $18.48 today. The 10-year has traded a bit lower, currently at 0.613%, while MBS has lagged the rally in the 10-year.
Initial Jobless Claims
Initial Jobless Claims for the week ending on April 11th fell by -1.37mln to 5.245mln versus the upwardly revised print of 6.615mln from the prior week (orig. 6.606mln). The 4-week moving average jumped to 6.066mln, up by 2.568mln from the previous week. Continuing claims shot up to 11.976mln, up by 4.53mln over the previous week. This is now the highest number of continuing claims on record, and if we look ahead to next week, that number is expected to hit roughly 16mln, which would put the jobless rate for April at 12%.
Housing Starts
Housing Starts for March fell by -22.3% to a 1.216mln seasonally adjusted rate versus the downwardly revised 1.564mln in February (orig. 1.599mln). Starts in the single-family space were down -17.5% to a 856k unit rate, with multi-family starts down -32.1% to a 360k unit rate. This is now the worst monthly decline since March 1984. Looking YoY, total starts are up +1.4%, with single-family up +2.8%, and multi-family down -1.6%. Finally, building permits fell -6.8% to a 1.353mln unit rate, down from the 1.452mln rate back in February.
Retail Sales
March Retail Sales fell by -8.7%, primarily from a -17.2% drop in gasoline sales, and a -25.6% decline in auto sales. If we exclude autos, sales were down -4.5%, while stripping out both fuel and autos, core sales were up +1.6%. Looking YoY now, headline sales are down -7%, with core sales down -2.3%. Other data within the report show food and beverage sales were up 26%, online sale rose +3.1%, clothing sales fell -51%, furniture sales down -27%, and restaurant sales -26%. The report this morning confirms that, due to the virus and social distancing, consumer spending has basically fallen off the cliff.
Empire State Manufacturing
The Empire State Manufacturing Index for April fell to the lower level on record, posting at -78.2. The previous record low was -34.3 back in February 2009. Within the report, only 7% of respondents reported conditions improved between March and April, while 85% reported weaker or worse conditions. The new orders index fell -57 points to -66.3, while the shipments index fell -66.4 points to -68.1. Delivery times were longer at 11.0 vs. a prior 2.2, while inventories were slightly lower at -9.7 vs. 5.8, previously. The index for future business conditions ticked up +5.8 points to 7.0, while the indices for future new orders (11.7) and future shipments (13.1) declined from March but remained positive in April.
