IS Risk Analytics' View From the Desk - May 2020
May volumes were very similar to April totals, but still far below the highs reached in February and March. Although volumes were in line with April, profits were far lower. Losses in oil suppressed profitability in the early weeks of May as the majority of retail clients held their long positions into the rally at the start of the month. Movements in indices later in May helped salvage respectable, though below average, overall profits for the month.
*Average Daily Volume represents the daily volume from ISRA customers for each day of the month divided by the average daily volume for the month. Each day is represented as a percent of the average.
** Average Daily B Book PnL represents the daily B Book PnL from ISRA customers for each day of the month divided by the average daily B Book PnL for the month. Each day is represented as a percent of the average.
Source: IS Risk Analytics Database. Past Performance is not necessarily indicative of future results
Tensions between the US and China escalated further in May following US President Donald Trump's criticism of China's recent proposals to impose new national security legislation on Hong Kong. At this time, the phase one trade deal in place between two countries remains intact, though there are indications China will not meet its obligation under the agreement to purchase $36.5 billion in US farm goods in 2020.
The European Central Bank is expected to expand the Pandemic Emergency Purchase Program by 250-500 billion Euros in early June in response the continued impact of the virus on European economies. The UK and the European Union have scheduled further Brexit negotiations, but little progress has been made thus far. The UK must decide by the end of June of it want to request an extension of the transition period that is currently scheduled to end in December.
US Non-Farm Payroll figures released in May began to fully reflect the impact of the coronavirus pandemic on the US economy. Over 20 million jobs were reported lost in April and unemployment shot up to 14.7%, the highest figure posted since World War II. Many states and localities began to loosen Covid related restrictions on their economies in May, but the Congressional Budget Office still projects it will take nearly a decade to fully recover from the fallout of the epidemic.