With economic data taking a backseat role to coronavirus concerns, Congress will be in focus this week. Over the weekend, lawmakers were unable to agree on terms to approve a $2 trillion dollar stimulus package aimed at providing the U.S. economy with a jolt ahead of what many predict will be a recession to come. St. Louis Fed President James Bullard recently said the unemployment rate could reach 30% in the 2nd quarter, while Morgan Stanley and Goldman Sachs analysts both said to expect the virus could impact GDP by 30%.
Volatility is still holding elevated levels as VIX futures closed above 60 last week, while the VIX index closed just below 70. Equity index futures opened limit down overnight before surging upward on word of the Fed announcing an open-ended asset repurchase program.
In addition to headlines this week, keep an eye on GDP, New Home Sales, Durable Goods Orders, Redbook, and the PMI Composite Flash for insight as to how hard the shutdown is impacting the economy. Also, keep an eye on commodities as they often signal how traders are interpreting conditions. Copper and crude oil have both been selling off and signaling major demand concerns, with crude last week hitting levels we haven’t seen since the spring of 2002 near 20.52.
Stay tuned to the TDA Network for coverage of all the breaking news and market reaction to it!