Economic releases
There were no major economic releases today. Tomorrow is the US Federal Reserve announcement, but no change in policy is anticipated. Nevertheless, Fed communications can often provide insights into how the US economy is unfolding and identify risks.
Quebec reopening details
Quebec announced details of its reopening. Firstly, it announced the reopening of the entire construction industry starting May 11, while other sectors will be staggered—with some opening as early as May 4.
Construction jobsites will resume activity in every sector of the construction industry, including public transportation and roadworks, residential, institutional, commercial, and industrial projects starting May 11.
Retail businesses (excluding shopping centres and retail outlets with storefronts in Montreal) will be able to resume their activities as of Monday, May 4, with Montreal based retailers being able to resume on May 11. Companies in the retail supply chain will be able to resume their activities on the same dates. Shopping centres will remain closed.
As of May 11, manufacturing companies in all regions of Quebec will be able to resume their activities. However, they must limit the number of workers. The formula is 50 workers + 50 percent of workers above the first 50 can be employed per shift. So, a company with 100 workers can only have 75 in a shift. Limitations will be gradually lifted. On May 25, manufacturing companies from all regions of Quebec will be authorized to resume their activities without any restriction as to the number of employees present.
All companies will have to put in place protective measures for their employees and customers to respect the protocol drawn up by public health authorities and CNESST. Employers should, among other things, install hygiene stations and encourage the adoption of flexible hours.
A few international developments to highlight
The governments of Spain and France have announced their plans to ease their lockdowns. In both countries, there were increased pressures to reopen to diminish the economic toll.
In France, businesses will be able to reopen as early as May 11 with the exception of cafes, restaurants, and large meeting places including museums and cinemas. Schools are expected to reopen progressively with class sizes limited to 15 per room.
In Spain, Prime Minister Pedro Sanchez announced his government's expectation to complete the transition to a "new normality" by the end of June.
There are troubling new international reports that show how trade finance is drying up as global warehouses are beginning to fill up with delayed shipments of goods that retailers are unable to sell. Trade finance is now drying up even more than in 2008 because international banks are rapidly reassessing risks and local lenders in some countries are not able to access dollar liquidity. Banks involved in trade finance (which include credit, insurance, and issuance of other guarantees) are increasingly exposed to the risk that exporters won't be paid for the goods that have been shipped. This has resulted in a shift in the risk profile of an activity that is traditionally considered to be relatively safe. Typically, most transactions are short-term with low default rates that had been historically supported by good collateral.
This is a major challenge for developing countries that are already struggling to secure essential supplies and will also need to overcome the vulnerabilities arising from export bans on food and medical equipment that some governments have put in place.
