Weekly Economic Update

Economic Update 6-01-2020

  • On a shortened holiday week, economic data continued its lackluster trend, now reporting the well-known weakness of April and May in many industries. Included were weaker numbers for durable goods, jobless claims, and pending home sales. Consumer sentiment and housing prices were mixed.
  • Global equity markets gained with optimism over lockdowns easing and a slow return to normalized activity. Foreign stocks outperformed U.S., helped by a weaker dollar. Bonds gained upon lower interest rates, and tighter credit spreads. Commodities gained along with hopes for economic recovery, led by higher crude oil prices—which have come a long way in recent weeks.

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Weekly Economic Update

Economic Update 5-26-2020

  • Economic news remained dreary, with expected poor results for home sales, leading economic indicators, and manufacturing—although there appear to see some signs of marginal improvement in sentiment for the latter.
  • U.S. and foreign equity markets rose as investors looked ahead to progress on a Covid vaccine, and continued extreme stimulus measures in the meantime, while emerging markets were less positively affected, due to deteriorating U.S.-China relations. Bonds were mixed as rates rose, yet corporate credit spreads tightened. Commodities gained as the price of crude oil and natural gas spiked last week with hope for stronger demand sooner than later.

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Weekly Economic Update

Economic Update 5-18-2020

 

  • Economic data continued to reflect the negative reality of Covid closures, with retail sales and jobless claims continuing to show extreme weakness, as well as a deceleration in inflation. On the other hand, manufacturing sentiment gained a bit—especially in future expectations—while consumer sentiment also improved.
  • Global equity markets fell back last week, as sentiment soured surrounding economic data, further stimulus, Covid infection rates, and foreign relations. Bonds were flat to higher with interest rates remaining tempered. Commodities rose slightly as crude oil prices continued to recover.

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Weekly Economic Update

Economic Update 5-11-2020

  • Economic data for the week remained poor from Covid effects, as expected, as ISM non-manufacturing and employment plummeted to lows not seen in years.
  • U.S. and some foreign markets rose as investors looked around the bend at planned reopenings and mixed news about U.S.-China trade. Bonds ticked lower as interest rates rose along the curve along with investors anticipating a bottom in economic conditions. Commodities rose along with expectations for normalizing global supply/demand conditions.

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Weekly Economic Update

Economic Update 5-04-2020

  • Data for the week included lackluster results for Q1 economic growth, personal income and spending, manufacturing, and jobless claims. These were all as expected due to the rapid business shutdowns since March.
  • U.S. and foreign equity markets were mixed last week as sentiment wavered back and forth surrounding virus and economic news. Bonds were little changed on net, with central bank policy consistently accommodative. Commodities rose as crude oil prices rebounded back from dislocations the prior week.

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Fed Note

The Federal Open Market Committee had no further policy moves to announce after their meetings this week. This follows lowering rates dramatically in March, to a minimum level of 0.00-0.25%, to counteract anticipated economic effects of the coronavirus. Other current tools being used include unlimited buying of treasury and agency mortgage-backed bonds, designed to keep interest rates contained to a desired low level. Extensive facilities are also in place to help provide liquidity for domestic fixed income markets and even some ETFs.

In their formal statement, the FOMC discussed the hardships from the virus, and disruptions caused. The zero-rate target is expected to remain until they’re ‘confident that the economy has weathered recent events’. With a limited set of policy tools remaining, the public’s confidence in their role in supporting the economy and financial markets as needed remains very important.

The metrics behind the key decision pillars have deteriorated sharply in the last month or two, from relatively strong to about the worst since the Great Depression of the 1930s:

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Weekly Economic Update

Economic Update 4-27-2020

  • Economic data for the week continues to reflect the current extreme slowdown, increasingly, as the March and April numbers are calculated and released. Jobless claims continued to come in at all-time highs, durable goods orders fell, and housing has begun to be affected as well.
  • Global equity markets fell back last week due to concerns over plummeting oil prices, continued uncertainty over Covid lockdown timelines, and possible profit-taking. Bonds were little changed. Commodities were strongly affected by a drop in crude oil prices below zero briefly, before recovering a bit.

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Weekly Economic Update

Economic Update 4-20-2020

  • Economic news, per the new norm, reflected a slowing economy from Covid-related shutdowns. This included disappointing results in retail sales, regional manufacturing, housing, and employment.
  • Global equity markets were mixed on the week, displaying far less volatility than in recent weeks, as hopes rose for reopening of the global economy sooner than later. Government bonds gained slightly, as interest rates ticked downward, faring better than corporates. Commodities were mixed, with volatility in crude oil continuing due to falling global demand.

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Weekly Economic Update

Economic Update 4-13-2020

  • Economic data included tempered produce and consumer inflation figures, and sharply negative results, as expected, for jobless claims, job openings, and consumer sentiment. Impact from coronavirus-related economic shutdowns have begun to filter into official economic data, which is likely to continue in coming months.
  • On a shortened Good Friday week, global equity markets gained sharply as hopes for a flattening of new coronavirus infections boosted investor sentiment. Bonds were mixed, as interest rates ticked higher—helping corporate credit—while governments sold off. Commodities were mixed, with energy markets softer, while metals gained ground.

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Weekly Economic Update

Economic Update 4-06-2020

  • Economic data continued to reflect a slowdown in activity as the result of the coronavirus, although last month’s releases were mixed to some degree, based on when the results were measured. A toll can already be seen in ISM non-manufacturing and employment.
  • U.S. and foreign equity markets fell back on continued uncertainty over economic impact from the coronavirus, and anticipation of a difficult few weeks ahead. U.S. bonds gained, upon government purchase support and a general investor avoidance of risk. Commodities gained as crude oil bounced sharply upon rumors of an OPEC production cut being discussed.

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Weekly Economic Update

Economic Update 3-30-2020

  • Economic news for the week was largely focused on dramatic actions from Congress and the Federal Reserve, intended to stem damage from the coronavirus-related shutdowns that have just begun. Other released data from months prior to the virus outbreak is now largely considered ‘stale’, but included mixed results for new home sales and durable goods orders.
  • Global equity markets rebounded sharply last week as extensive stimulus measures in the U.S. and Europe raised optimism about the global economy slogging through the months ahead. Bonds also fared well, especially in corporates as new government facilities improved sentiment and liquidity. Commodities were mixed with gold faring well while oil remained weak.

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Weekly Economic Update

Economic Update 3-23-2020

  • Economic news last week was largely dwarfed by the dramatic efforts in progress by Congress and the Federal Reserve to stem the tide of economic and financial market damage from coronavirus-related shutdowns. Other released data included weaker retail sales and manufacturing indexes, while housing data exceeded expectations.
  • Global equity markets experienced their worst week since the financial crisis, with medical and economic fallout from the coronavirus expected to drive the world economy into recession. Bonds were also mixed, with U.S. treasuries providing some safe haven benefit, while corporate bonds suffered as spreads widened, particularly in mid- and lower-quality issues. Commodity values also fell, led by new multi-year lows in oil prices due to Russia-Saudi production and policy conflicts.

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