Initial jobless claims in the US slow down less than expected
Figures regarding new jobless claims in the US published this morning show that 1.5 million new claims were made last week, practically the same level recorded two weeks ago (1.57M), which suggests a slower reduction in unemployment so far in June. Since mid-March, figures surpass one million claims and a greater fall was expected for the second week of June, given the economy`s reopening. Total claims that are still in force (the number of citizens that still get government aid) also slowed down moderately to 20.5 million during the week ending June 7th (vs 20.6M prev., 19.8M e.). Data from the Department of Labor continue to show improvements in the labor market, but also seem to indicate that the rhythm of employment has slowed down in the last to weeks.
Tensions between Europe and the US
The European Union and the United States suspended negotiations to determine regulations and new taxes to be placed on tech companies and digital services after the US left because it considered that the negotiations lacked progress. The negotiations started in 2016 under the auspice of the OECD, but after it left the conversations, the US threatened to impose new tariffs on Europe if it decided to continue with its plans to tax US tech companies` incomes that operate in European territory. Spain, France, the UK and Italy had shown intentions of taxing US tech multinational companies. The French Minister of Finance, Bruno Le Maire, has described the US action as a provocation and has called to ignore the threat and continue with the implementation of new taxes. Europe and the US succeeded in avoiding a trade-related confrontation last year after President Trump threatened to impose tariffs on the European automotive sector, but the tensions increased by the current disagreement could revive the risk of less dynamic transatlantic trade scenario.
BoE increases purchasing programs
In line with the rest of central banks in advanced economies, the Bank of England (BoE) decided to increase its asset purchasing program in 100 billion British pounds. The decision was voted on by majority (8-1) and maintained the interest rate at 0.1%. The purchasing program will help support low rates for financing an aggressive fiscal program carried out by the British government that seeks to revive the economy, even though the BoE announced it will reduce the frequency of its purchases in the following days. The increase in total volume of purchases will be maintained towards the end of the year and responds to a 20% fall in economic activity in the country during April as well as the risks of a Brexit without an agreement. Markets still expect more increases in the bank`s purchasing programs before the end of the year, and it`s still possible that negative interest could be seen if the economic contraction is persistent and no commercial agreement is achieved with the EU. The British pound weakened in today`s session.