Though headlines have been increasingly dominated by a resurgence in COVID-19 cases, we continue to see improvements in back-to-business segments such as department store spending. Stay-at-home categories have started to decelerate, but may see tailwinds if states renew their lockdowns and risk-averse consumers choose to remain indoors.
Anticipated stimulus measures pushed the S&P 500 up briefly last week, but steep falls on Wednesday and Friday led stocks to end the week down 2.86%. These pullbacks occurred on the back of rising COVID-19 cases and renewed lockdowns in some states, and concern around trade restrictions with both China and Europe. In Europe, the Eurostoxx 600 ended the week down 1.90% despite improved economic data and a number of ECB stimulus actions. Read More
Oil prices came under pressure last week as coronavirus fears intensified and US oil inventories showed a build up. WTI and Brent ended the week at $38.49 and $41.02 per barrel, respectively. Gold touched a seven-year high midweek, as investors looked for an inflation hedge while monetary stimulus keeps real rates low. Soybean prices rallied, as China increased its purchases of US soybeans, where demand was previously muted. Read More
US Treasury yields declined last week amid rising coronavirus cases and concerns over a second wave. The 10-year yields dropped to 0.64% as investors looked for safety after daily total new infections in the US hit its highest level and jobless claims came in higher than expected. UK Gilt yields similarly saw a decline, with 5-year yields dropping to a record low this week. Corporate debt market spreads widened, with US investment grade and high yield spreads reaching 153 basis points (bps) and 618 bps, respectively, following a selloff as investors tried to pare back exposure to coronavirus-impacted industries. Read More
The Euro showed strong performance last week, rising 0.37% against the US dollar as the ECB reaffirmed its dovish stance, giving hope for future stimulus. The US Dollar Index maintained steady footing despite virus concerns, slipping 0.07% last week. Read More
In the Euro area, June’s composite PMI rebounded by 15.6 points to 47.5, consistent with the easing of lockdown measures and improvements in high-frequency activity data. However, the indicator remains below 50, indicating that the economy is not yet back in expansionary territory. Read More
Core PCE, the Fed’s preferred inflation measure, rose +0.1% in May or 1.0% year-over-year. May’s consumer spending rose a record +8.2%, reflecting the reopening of many businesses. Personal income fell -4.2% and is at risk of further declines absent further stimulus measures from Congress. Read More
June ECB meeting minutes indicated that there was “broad agreement” that its monetary policy’s “negative side effects had so far been clearly outweighed by the positive effects of asset purchases on the economy in the pursuit of price stability.” In addition, the ECB will begin offering euro liquidity to non-Euro area central banks in response to the COVID-19 crisis. Read More
The German Ifo business climate index edged higher, above market consensus, due to an improvement in business expectations. However, high dispersion indicated that the outlook remains uncertain. Read More
For style performance, Large, Mid, and Small refer to the Russell 1000, Russell Midcap, and Russell 2000 indices, respectively. Value refers to companies with lower price-to-book ratios and lower expected growth values, and Growth refers to higher price-to-book ratios and higher forecasted growth values. Government, Corporate, and High Yield refer to the US Treasury index, the US Corporate Credit index, and the US High Yield index, respectively. Short, Intermediate, and Long refer to the Short, Intermediate, and Long segments of their respective curves. Quality returns refers to the credit quality of asset classes ranging from Government, highest quality, to High Yield, lowest quality.
Japan Unemployment (Cons: 2.8%, Prior: 2.6%)
China PMI Manuf. (Cons: 50.7, Prior: 50.7)
ISM Manuf. (Cons: 49.5, Prior: 43.1)
US Unemployment (Cons: 12.4%, Prior: 13.3%)
US Jobless Claims (Cons: 1336k, Prior: 1480k)
Euro area Unempl. (Cons: 7.7%, Prior: 7.3%)
“Euro PMI” refers to the Markit Eurozone Composite Purchasing Managers’ Index. “Cons. Conf.” refers to US Consumer Confidence. “GE IFO Business” refers to the German Ifo Business Climate Survey. “New Home Sales” refers to US New Home Sales (MoM). “Dur. Gd. Ord.” refers to US Durable Goods Orders. “UK GDP” refers to the QoQ estimate of the United Kingdom’s Gross Domestic Product for Q3. “Euro M3” refers to the YoY change in the Eurozone’s M3 Money Stock. “US GDP” refers to the estimate of US Gross Domestic Product for Q3. “Pers. Cons.” refers to US Personal Consumption. “UMich Cons. Sent.” refers to the University of Michigan Consumer Sentiment Index. “Japan Core-Core CPI” refers to Japan’s Consumer Price Index (ex- Food, Energy YoY).
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